Ross Mandell, the founder of Sky Capital Holdings Ltd, was recently charged with conspiracy, securities fraud, wire fraud and mail fraud based on allegations he defrauded investors out of $140 million. A jury found Mandell guilty of the charges. Adam Harrington, a former broker at Sky Capital, was also found guilty of the same offenses.
Securities fraud is a felony charge that requires the prosecution to prove some type of willful and intentional deception occurred within the process of buying, selling and trading of stocks, securities and commodities. Markets are constantly changing and brokers, brokerage houses, traders, commodities and securities buyers and seller can willfully deceive others in the market for profit, which is a key element in securities fraud.
The prosecution alleged that Mandell funded personal expenditures on private jets, luxury hotels and expensive Swiss watches with investor funds. Prosecutors provided Federal Bureau of Investigation recordings in which Mandell urged brokers to lie to investors about the quality of investments. Mandell, Harrington and others at Sky also paid themselves excessive commissions and paid off investors who had lost money.
The U.S. Securities and Exchange Commission also filed civil charges alleging that the suspects raised more than $61 million from 2002 to 2006 in a scheme that restricted investors from selling their shares in two Sky companies. When the London Stock Exchange suspended trading in those stocks, the investments became worthless.
Securities fraud charges are generally only filed after lengthy evidence gathering, such as the investigation of Sky Capital. Criminal and civil penalties for securities fraud are serious and may include:
As soon as you learn of an SEC or FBI investigation or when charges are filed, you need to immediately retain an experienced securities fraud criminal defense attorney. An experienced attorney will explain your legal rights, explore potential defenses for a trial, or if necessary, seek to lessen the potential fines, restitution and incarceration through a plea agreement if a trial is not advisable.
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