A federal criminal indictment against 13 members of an accused “boiler room” focused on Miami-based Realcast as playing key role in the alleged securities fraud.
Following New York media reports of an FBI raid on the Manhattan offices of securities brokers Powercom Energy Services Corp. and Empire Energy Services Corp. on Wednesday, a criminal indictment was unsealed in U.S. District Court for the Southern District of New York. It accused them of defrauding investors who bought more than $12 million in stock in Realcast and New York-based BBC Gaming, an online gaming company, based on “false and fraudulent statements.”
Among the accused is Realcast President and CEO Steven Kimmel, a former Securities and Exchange Commission employee.
The grand jury indictment also named brokers Anthony Guarino, William Dick, Lance Barbarino, Gabriel Almandi, Ciro Cozzolino, Isaac Davis, Salvatore Guarino, Peter Sharpe, Jamil Fuller, William Rothlein, Christopher Savino, and BBC Gaming President and CEO Alex Lemberg.
They were charged with securities fraud, conspiracy to commit securities fraud, wire fraud and conspiracy to commit wire and mail fraud.
According to the indictment, Realcast was founded in 1999 to provide live broadcasting and video on demand over the Internet. It operated out of 10800 Biscayne Blvd, Suite 510.
Starting in 2000, Realcast issued at least $12 million in stock to investors to finance its business. An offering memoranda in 2000 said brokers would be paid a 10 percent commission for selling its shares, while memoranda from 2004 and 2008 said no brokerage commission would be paid.
However, Powercom and Empire collected commissions of at least 40 percent when it sold shares of Realcast, the indictment stated. It said Realcast had minimal revenues generated from its business operations.
In one instance, broker Barbarino told a fellow broker that his “mother will come out of the grave” before Realcast is a successful company, the indictment said. Yet, two months later, Barbarino told potential investors their shares in Realcast would soon increase in value.
Similarly, the indictment said brokers at Powercom and Empire understated the commissions they would get from selling shares of BBC Gaming in 2009.