Colorado Attorney Admits Role in Stock "Pump and Dump" Scheme
John H, Durham, United States Attorney for the District of Connecticut, announced that DIANE DALMY, 63, of Denver, Colorado, waived her right to be indicted and pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to one count of conspiracy stemming from her role in a securities fraud scheme.
According to court documents and statements made in court, DALMY, an attorney, performed securities-related legal work on behalf of several public companies, including Mammoth Energy Group, Inc., a company that later became known as Strategic Asset Leasing Inc.; and Fox Petroleum, Inc. (the “Subject Companies”). Between approximately January 2009 and July 2016, DALMY conspired with others, including William Lieberman, of Boca Raton, Florida, and Christian Meissenn, of Suffield, Connecticut, to defraud investors through a stock “pump and dump” scheme. During the course of the conspiracy, DALMY acted largely at Lieberman’s direction.
As part of the scheme, Lieberman, Meissenn and others induced investors to purchase securities by making false and misleading representations in calls, emails and press releases concerning the securities and the issuing companies, thereby causing the price of those securities to become falsely inflated. The issuing companies, which were essentially shell companies with virtually no legitimate business activities, were controlled by Lieberman and others. After the hype led to artificially-inflated share prices for the company’s stock, Lieberman, Meissenn and others sold their own large positions in the stock at a profit. They then ended the promotion and allowed the share price to plummet, leaving investors holding worthless and unsalable stock. As a result, victim investors lost millions of dollars.
DALMY participated in the conspiracy by writing, and permitting Lieberman to write in her name, fraudulent opinion letters that were used to unrestrict the co-conspirators’ stock so that the stock could be freely traded on the open market (without having to register the stock with the Securities and Exchange Commission). The opinion letters were materially false in various respects, including as to whether the issuing company was a shell company, whether the shareholder was an affiliate of the issuer, whether the transactions described in the letters actually had occurred, and whether DALMY had performed the due diligence that she described in the letters. DALMY also ghost-wrote similarly fraudulent opinion letters for the Subject Companies in another Colorado attorney’s name and permitted Lieberman to do so. These included “adequacy” letters that were posted on a website maintained by an electronic securities marketplace. In general, an “adequacy” letter, which is intended to be relied upon by investors in making investment decisions, accompanies a public filing by an issuer and states that, after appropriate investigation, it is the authoring attorney’s opinion that adequate current information about the issuer is publicly available for investors to review.
At times, DALMY provided the co-conspirators with capital by advancing money from her Lawyer Trust Account (“IOLTA”). These funds belonged to other clients of DALMY’s law practice who did not know that their funds had been advanced to the co-conspirators by DALMY.
Finally, between February 2015 and July 2016, DALMY laundered a portion of the proceeds of the scheme on behalf of the Co-Conspirators. DALMY helped Lieberman to incorporate and open bank accounts for a private company, Queen Asia Pacific Ltd. (“Queen Asia”), which was controlled by Lieberman. These bank accounts were used to receive proceeds of the scheme from a brokerage account in Queen Asia’s name. DALMY periodically received money in Queen Asia’s bank accounts, transferred those funds to her IOLTA, and then transferred the funds again to Lieberman, Meissenn, and their network of stock promoters. In total, DALMY laundered approximately $825,000 on behalf of the co-conspirators through Queen Asia’s bank accounts and her IOLTA.
DALMY’s total gain from her participation in this conspiracy, and related legal work for the Subject Companies, was approximately $30,000.
Judge Meyer scheduled sentencing for May 2, 2018, at which time DALMY faces a maximum term of imprisonment of five years. DALMY is released on a $100,000 bond pending sentenced.
Lieberman, Meissenn and four other individuals have pleaded guilty to various offenses stemming from this scheme.
On January 20, 2017, Corey Brinson, a Hartford-based attorney, was sentenced to 36 months of imprisonment and, on September 27, 2017, Damian Delgado, also known as “Michael Neumann,” of Orlando, Florida, was sentenced to 84 months of imprisonment. Meissenn, Lieberman, Brian Ferraioli, of Sayville, N.Y., and Thomas Heaphy, Jr., of East Moriches, N.Y., await sentencing.
This ongoing investigation is being conducted by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigation Division and U.S. Postal Inspection Service, with assistance from the Connecticut Department of Banking and the Hartford and Stamford Police Departments. This case is being prosecuted by Assistant U.S. Attorney Avi M. Perry.
Citizens with information that may be helpful to this ongoing investigation, or who believe they may have been victimized by this scheme, are encouraged to contact the FBI at (203) 777-6311.