Feds Hand Down Superseding Indictment to Cane and Her Co-defendants.

Superseding Indictment Against Kyleen Cane


On November 2nd, 2015, the Feds filed a Superseding Indictment against Cane and her co-defendants including among other charges conspiracy to commit mail and wire fraud.  The update to the indictment mainly included 3 additional professionals, who were also arrested.  The complexity, scope, and pervasive corruption of lawyers and brokers is par for the course of a fraud involving Kyleen Cane.   (20151102 US v Cane Information Sheet20151102 Application for Leave to File Document Under Seal20151102 Superseding Indictment US v Cane Case No. 14-cr-00399-ENV20151104 US v Cane Unsealing Order Superceding Indictment) On November 4th, the complaint was unsealed and on November 20th, new defendants arrested, old defendants were again arraigned and plead not guilty. (20151120 US v Cane Superceding Indictment Arraignment & Status Conference) Three defendants Marc Wexler, Matthew Bell, and Victor Azrak have already plead guilty (obviously  cooperating) and are awaiting sentencing.

An overview of the schemes and defendants is also discussed in the FBI Press Release. Another article also covering the additional arrests of another attorney and registered brokers can be found here.

Page 6 of the Superseding Indictment provided an overview of the conspiracy to commit securities fraud and the schemes the defendants employed: “In or about and between October 2012 and July 2014, the defendants ABRAXAS J. DISCALA, also known as “AJ Discala,” IRA SHAPIRO, CRAIG JOSEPHBERG, also known as “Jobo,” KYLEEN CANE, DARREN GOODRICH, DARREN OFSINK and MICHAEL MORRIS, together with others, agreed to defraud investors and potential investors in CodeSmart, Cubed, StarStream and Staffing Group (collectively, the “Manipulated Public Companies”) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through, inter alia: (a) false and misleading press releases; (b) false and misleading SEC filings; ( c) fraudulent concealment of the defendants’ and their co-conspirators’ beneficial ownership; (d) engineering price movements and trading volume in the stocks; and ( e) unauthorized purchases of stock in accounts of unwitting investors.” 20151102 Superseding Indictment US v Cane Case No. 14-cr-00399-ENV

Page 16 of the Superseding Indictment briefly cited Cane’s role in one of the schemes, “During four telephone calls that day, May 23, 2014, the defendant ABRAXAS J. DISCALA’s, also known as “AJ Discala,” control of the price of Cubed’s stock is apparent. During a telephone call that morning, DISCALA and the defendant KYLEEN CANE discussed the jump in Cubed’s price to $7 per share, and CANE stated, in part, “We need to keep it back down now. We need to keep it back down.” Later that day, during a telephone call between DISCALA and Co-Conspirator 2, DISCALA stated, in part, “I talked to Kyleen [CANE], and we, we don’t want this. We would want 6.35 today, 6.30, something like that, and then let, let news rip it next week.” DISCALA also called Co-Conspirator 3, a corrupt investor whose identity is known to the Grand Jury, to explain the trading in Cubed’s share price, and stated, in part, “Yeah like .. .it just looks stupid! It went up, and up, and then it came back, you know-it’s like, look, if we ended at 6.30, we’re good. I wanna bring it back up to 6.55; 6.55 on Tuesday, which I can, with some news, right? And just keep stepping it.” Finally, during a telephone call with the defendant DARREN GOODRICH, DISCALA stated, “So Kyle’s [CANE] re-tweaking this thing to 6.35, I just wanted to let you know.” 20151102 Superseding Indictment US v Cane Case No. 14-cr-00399-ENV

Will Kyleen Cane run? Will she go to trial? Will she commit suicide? Will she plea? It’s anyone’s guess.