Five Additional Corporate Executives Charged in Connection with Securities Fraud and Obstruction of Justice Committed by Chief Officers of Spongetech Delivery Systems, Inc.
Defendants Collectively Charged with Securities Fraud, Obstruction of Justice, Money Laundering, Structuring, Contempt of Court, and Perjury
A superseding indictment was unsealed today in federal court in Brooklyn charging five additional defendants with crimes relating to Spongetech Delivery Systems, Inc. (Spongetech).1 The superseding indictment includes charges previously brought against Michael Metter, the Chief Executive Officer and President of Spongetech, and Steven Moskowitz, Spongetech’s Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, and Secretary.
Today’s superseding indictment charges former Spongetech employees Andrew Tepfer, Seymour Eisenberg, Thomas Cavanagh, and Frank Nicolois, as well as former Spongetech vendor George Speranza. Tepfer, Eisenberg, Nicolois, and Speranza were arrested this morning. Their initial appearances are scheduled today before United States Magistrate Judge Robert M. Levy at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Janice K. Fedarcyk, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, and Charles R. Pine, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.
As alleged in the superseding indictment, between January 2007 and May 2010, Tepfer, and Eisenberg, together with Metter, Moskowitz, and others, executed a fraudulent scheme to publicly report materially overstated Spongetech sales figures to create artificial demand for, and increase the share price and trading volume of, Spongetech common stock. Tepfer and Eisenberg face one count of conspiracy to commit securities fraud, one count of money laundering conspiracy, and one count of securities fraud.
Cavanagh and Nicolois face one count of structuring and one count of contempt of court. The superseding indictment alleges that from January 2008 and December 2009, Cavanagh and Nicolois cashed checks written in amounts less than $10,000 at a financial institution for the purpose of evading federal currency transaction reporting requirements. The indictment also alleges that in doing so, Cavanagh and Nicolois violated a court order entered in a 2004 lawsuit brought by the United States Securities and Exchange Commission (SEC) against them and others.
Speranza faces one count of conspiracy to obstruct justice, one count of obstruction of justice, and one count of perjury. The superseding indictment alleges that Speranza gave false testimony under oath in an investigation by the Enforcement Division of the SEC into Spongetech’s publicly reported sales figures and financial statements.
If convicted, Tepfer and Eisenberg face up to 20 years’ imprisonment on the securities fraud counts. Cavanaugh and Nicolois face up to 10 years’ imprisonment on the structuring counts. Speranza faces up to five years’ imprisonment on the obstruction of justice count.
The government’s case is being prosecuted by Assistant United States Attorneys William E. Schaeffer and Jeffrey A. Goldberg.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
ANDREW TEPFER, also known as “AVI”
SEYMOUR EISENBERG, also known as “JIMMY”
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