Former Stockbroker Pleads Guilty In Manhattan Federal Court To Bribery Scheme
Preet Bharara, United States Attorney for the Southern District of New York, announced that former stock broker CHRISTOPHER KLINE pled guilty today to participating in a scheme to provide secret bribes to a stock broker in order to induce the broker to purchase G&S Minerals, Inc. (“G&S”) common stock on behalf of his clients. KLINE, 49, a resident of York, Pennsylvania, pled guilty in Manhattan federal court before U.S. Magistrate Judge Gabriel W. Gorenstein.
Manhattan U.S. Attorney Preet Bharara said: “Christopher Kline violated his duty as a stockbroker, and in the process, broke the law. And for his role in the middle of a conspiracy to manipulate the market for the stock of a publicly traded company, he now stands convicted. This kind of corruption undermines confidence in the markets and cheats legitimate investors.”
According to the Indictment filed in Manhattan federal court, public court filings, and statements made during KLINE’s guilty plea proceeding:
From July 2007 through February 2008, KLINE participated in a scheme in which one of his clients, William Curtis, agreed to pay secret cash bribes to a confidential informant (“CI”) working with the Federal Bureau of Investigation (“FBI”). The CI posed as a financial adviser who, in exchange for receiving the bribes from Curtis, purportedly convinced “investors” to purchase the common stock of G&S that Curtis controlled. G&S was a Nevada Corporation whose common stock was publicly traded on the Pink Sheets, an inter-dealer quotation service that provides financial information for certain over-the-counter securities and issuers. One purpose of the bribes was for Curtis to sell his G&S stock, which he did through accounts managed by KLINE.
KLINE acted as the middleman between Curtis and the CI. Curtis agreed to pay the CI a kickback of 30 percent of any orders placed by the CI, and the CI in turn agreed to pay 10 percent of the kickback to KLINE for his role in the scheme. In conversations recorded by the FBI, KLINE (1) discussed with the CI specific price and volume targets for the purchases and orders placed by the CI on behalf of his “investors,” (2) facilitated the bribe payment from Curtis to the CI, and (3) was overheard collecting his 10 percent kickback.
* * *
KLINE pled guilty to one count of participating in a conspiracy to commit securities fraud and commercial bribery, and one count of securities fraud. The charges carry a maximum combined penalty of 25 years in prison and a maximum fine of $5,000,000. In addition, KLINE has agreed to forfeiture of the $2,000 in proceeds he obtained for his commission of the offenses. KLINE is scheduled to be sentenced by U.S. District Judge Shira A. Scheindlin on September 10, 2013, at 4:30 p.m.
Curtis, 50, a resident of Naperville, Illinois, pled guilty in October 2009, before U.S. District Judge Samuel Conti to one count of participating in a conspiracy to commit securities fraud and commercial bribery, and one count of securities fraud. In June 2010, Chief U.S. District Judge Loretta A. Preska sentenced Curtis to three years of probation and ordered him to pay a $200 special assessment.
The charges against KLINE are the result of a wide-ranging FBI undercover investigation of related stockbroker bribery schemes involving US-based, Canadian-based and Costa Rican-based stock promoters and stockholders. Mr. Bharara praised the work of the FBI, the Vancouver Integrated Market Enforcement Team of the Royal Canadian Mounted Police, the Vancouver Police Department, the Criminal Prosecution Assistance Group of FINRA, and the U.S. Securities and Exchange Commission for their assistance in this investigation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being prosecuted by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney John J. O’Donnell is in charge of the prosecution.