Former Registered Broker Pleads Guilty To Securities Fraud Conspiracy For Participating In A $131 Million Market Manipulation Scheme
Defendant Profited By Promoting To Investors Worthless Stock Of A Company That Purported To Be A Worldwide Distributor And Provider Of LED Lighting Products
BROOKLYN, NY – Earlier today, Christopher F. Castaldo, a former registered broker who was the owner of two subscription-based investment research firms, pleaded guilty to conspiracy to commit securities fraud in connection with the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company listed on the NASDAQ under the ticker symbol “FNRG.” The guilty plea was entered before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn, New York. When sentenced, Castaldo faces up to five years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, 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. Mr. Capers thanked the Securities and Exchange Commission, New York Regional Office, for their cooperation and assistance in the investigation.
According to court filings and facts presented at the plea hearing, between January 2009 and April 2015, the defendant, together with others, engaged in a scheme to defraud investors in ForceField, a purported worldwide distributor and provider of LED lighting products and solutions, by artificially controlling the price and volume of traded shares of ForceField through, among other means: (1) using nominees to purchase and sell ForceField stock without disclosing this information to investors and potential investors; (2) orchestrating the trading of ForceField stock to create the appearance of genuine trading volume and interest in the stock; and (3) concealing payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while claiming to be independent of the company. The defendants’ fraudulent scheme caused a loss of approximately $131 million to the investing public.
Between June 2011 and June 2014, Castaldo received commission payments, or kickbacks, in cash and in ForceField stock, from a ForceField executive for promoting the purchase of ForceField stock to investors, including by contacting subscribers who paid to receive independent investment research from Castaldo’s companies. Castaldo and employees working at his direction did not disclose his compensation arrangement while soliciting his paid subscribers to purchase ForceField’s stock. In addition, during some of the periods in which Castaldo was promoting the purchase of ForceField’s stock to his subscribers, Castaldo was actively selling ForceField stock he had received. Castaldo did not disclose this to the subscribers who were being solicited to purchase ForceField stock.
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The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Mark E. Bini and Lauren H. Elbert are in charge of the prosecution.
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CHRISTOPHER F. CASTALDO
Residence: Glen Head, New York
E.D.N.Y. Docket No. 16-CR-234 (S-1) (BMC)