Former Long Island Broker Pleads Guilty to Participating in a $147 Million Stock Manipulation Scheme
Defendant Misled Investors into Purchasing Artificially Inflated Stock in Publicly Traded Companies
Earlier today, in federal court in Central Islip, Stephanie Lee, a former broker who worked in conjunction with Plainview-based Elite Stock Research and Melville-based My Street Research and related companies (“My Street Research”), pleaded guilty to conspiracy to commit securities fraud, securities fraud, money laundering and money laundering conspiracy, wire fraud conspiracy and obstruction of an official proceeding in connection with the sale of the stock of two publicly traded companies, CES Synergies, Inc. (CESX), and National Waste Management Holdings, Inc. (NWMH). The top count to which Lee pleaded guilty carries a maximum sentence of 20 years’ imprisonment. The plea proceeding took place before United States District Judge Joanna Seybert.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea. Mr. Donoghue expressed his appreciation to the United States Securities and Exchange Commission for its significant cooperation and assistance in the investigation.
As alleged in court papers, between August 2013 and July 2017, Lee and her co-defendants engaged in a scheme to defraud investors, many of them elderly, through the use of high-pressure call centers located at Elite and My Street Research. Lee and her co-defendants artificially controlled the trading price and volume of publicly traded companies by, among other things, retaining Elite and My Street Research to use pressure tactics, material misrepresentations and omissions to induce victims from around the country to purchase stock. Although the victims believed they were buying stock on the open market, Lee and her co-defendants secretly coordinated the trading so that the victims purchased shares at inflated prices that were owned and controlled by Lee and certain co-defendants. Following her arrest, Lee gave false information to the FBI agents who interviewed her in connection with the alleged fraud.
Lee is among 16 defendants who were charged in July 2017 in connection with the $147 million illegal stock manipulation scheme, and she is the thirteenth defendant to plead guilty. A fourteenth defendant, Michael Watts, was convicted after trial in October 2019. Four defendants have been sentenced for their roles in the scheme: Ronald Hardy was sentenced to 10 years’ imprisonment; Dennis Verderosa was sentenced to six years’ imprisonment; McArthur Jean was sentenced to four years’ imprisonment; and Emin Cohen was sentenced to two years’ imprisonment.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Whitman G.S. Knapp and Kaitlin T. Farrell are in charge of the prosecution. Assistant United States Attorney Tanisha R. Payne of the Office’s Asset Forfeiture Section is handling the forfeiture matters.
St. Petersburg, Florida
E.D.N.Y. Docket No. 17-CR-372 (S-3)(JS)
The Defendants Who Were Previously Convicted:
Port Jefferson, New York
MCARTHUR JEAN, also known as “John McArthur”
Dix Hills, New York
Mt. Sinai, New York
BRIAN HEEPKE, also known as “Brian Targis”
Farmingdale, New York
Coram, New York
EMIN L. COHEN, also known as “Ian Grant”
Coram, New York
Massapequa, New York
Central Islip, New York
East Meadow, New York
Cold Spring Harbor, New York
Farmingdale, New York
E.D.N.Y. Docket No. 17-CR-372 (JS)