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Thursday, July 30, 2009
South Florida Stock Trader Sentenced to 30 Months in Prison for Role in Securities Fraud Scheme

WASHINGTON – A stock trader from Jupiter, Fla., was sentenced today to 30 months in prison for engaging in securities fraud involving several publicly traded companies, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced.

Paul M. Gozzo, 33, was sentenced today by U.S. District Judge Donald L. Graham in the Southern District of Florida. In addition to the prison sentence, Judge Graham ordered Gozzo to serve two years of supervised release following his release from prison and to forfeit more than $437,000 in net profits from his criminal conduct.

Gozzo pleaded guilty on March 17, 2009, to one count of conspiracy to commit securities fraud and one count of securities fraud. In his plea, Gozzo admitted to engaging in a market manipulation scheme with two co-conspirators for the purpose of artificially inflating the prices of several publicly traded stocks. Gozzo also admitted that he and his co-conspirators manipulated the stock price of several stocks by, among other things, creating the false appearance that there was greater investor interest and liquidity in the stocks than actually existed. In return for his assistance in manipulating the stock prices of these companies, Gozzo admitted that he received approximately $540,000, which resulted in a profit to Gozzo of more than $437,000.

According to information contained in plea documents, Gozzo admitted that he conspired with a purported investment banker, who owned large amounts of stock in several public companies, and the investment banker’s son to artificially increase the stock price of those companies. They did so, according to court documents, by providing support bids for shares of those companies and by engaging in coordinated trades with each other and others for the purpose of keeping the stock price artificially inflated and further inflating the stock price. This created the impression that there was a greater investor interest in the stock than truly existed, which allowed Gozzo and his co-conspirators to sell that stock at an artificially high price. Gozzo admitted that he and his co-conspirators also bought and sold stock through numerous broker-dealers to make it appear that there were several investors trading in the stocks they were manipulating, when in fact there were not additional investors. In return for Gozzo’s assistance in manipulating the stock prices of these companies, the investment banker compensated Gozzo in the form of cash retainer payments and both free-trading and restricted stock.

This case was prosecuted by Assistant Chief Hand Bond Walther and Trial Attorney Nicole H. Sprinzen of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office. Significant assistance was provided by the U.S. Securities and Exchange Commission.

09-748
Criminal Division
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