A ten-count indictment was unsealed this morning in federal court in Brooklyn, New York, against seven defendants, Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC (“OmniView”); Marc Wexler, the Managing Director of OmniView; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly traded company; Matthew Bell, a registered broker and investment adviser representative; Craig Josephberg, a registered broker; Kyleen Cane, an attorney; and Victor Azrak, the Vice President and Director of Excel Corp., a publicly traded company.1 The charges include securities fraud, wire fraud and conspiracy to commit securities fraud, mail fraud and wire fraud in connection with the fraudulent market manipulation of four publicly traded companies — CodeSmart, trading under the ticker symbol ITEN; Cubed, Inc. (“Cubed”), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (“StarStream”), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (“Staffing Group”), trading under the ticker symbol TSGL. In addition, the government restrained Discala’s residence in Norwalk, Connecticut, worth over $1 million, and seized a dozen bank and brokerage accounts containing criminal proceeds.
Shapiro, Josephberg and Azrak will be arraigned later today before Magistrate Judge Robert M. Levy, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Discala, Wexler and Cane’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 333 S. Las Vegas Blvd., Las Vegas, Nevada. Bell’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 655 E. Cesar E. Chavez Blvd., San Antonio, Texas.
The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“Discala and his company insiders, registered brokers, investment advisers, an attorney and corrupt investors designed an elaborate but fraudulent scheme built on lies, deceit and manipulated trading activity to defraud the securities markets and the investing public. They took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades. When the defendants stopped their criminal game of musical shares it was the unsuspecting investors who were left holding the bag. The defendants abused their positions of trust and preyed upon unsuspecting and elderly investors, oftentimes placing worthless stocks in their retirement accounts, to perpetrate this far-reaching fraud,” stated United States Attorney Lynch. “Today’s seven arrests, across five states, reflect the scope of this fraud and our commitment to aggressively locate and bring to justice those who abuse our financial markets in order to fraudulently enrich themselves.” Ms. Lynch expressed her grateful appreciation to the FBI, the United States Securities and Exchange Commission and the Texas State Securities Board for their significant cooperation and assistance in the investigation.
“As outlined in the indictment, the defendants engaged in a coordinated and sophisticated scheme to manipulate the share price and trading volume of four publicly traded stocks for personal gain. This lucrative scheme to manipulate our financial markets made the defendants money, while draining the bank accounts of innocent investors. Their client-victims trusted them to manage their money as if it were their own, not to steal it. Together with our partners in both law enforcement and the private sector, to include the Securities and Exchange Commission, we remain vigilant in identifying and bringing to justice those who look to profit at the expense of hard-working Americans,” stated FBI Assistant Director-in-Charge Venizelos.