Boca Raton Man Arrested for Securities Fraud and Mail Fraud Conspiracy
BIRMINGHAM – The FBI on Thursday arrested a Florida man on securities and mail fraud charges related to a multi-million dollar scheme involving highly speculative, low-priced penny stocks, announced U.S. Attorney Jay E. Town and FBI Special Agent in Charge Johnnie Sharp Jr.
A ten-count indictment filed in U.S. District Court charges BRIAN ROBERT “Mailman” SODI, 46, of Boca Raton, with conspiracy to commit securities fraud and mail fraud, and related charges.
“Financial crimes prey on the unsuspecting public and undermine the integrity of the nation’s stock exchanges,” Town said. “Pump-and-dump schemes like this must be disrupted by law enforcement before they disrupt market forces.”
According to the indictment, Sodi used his Florida-based publishing houses to distribute deceptive promotional mailers recommending the purchase of select penny stocks, while hiding from potential investors that he secretly was selling the stocks he was urging them to buy. The indictment also charges that Sodi obscured his involvement in the scheme by using offshore accounts and intermediaries to launder the proceeds of his fraud back to himself and his publishing houses.
According to the indictment, Sodi conducted his scheme as follows:
He would acquire shares of a publicly-traded stock, positioning himself to benefit from selling the shares at inflated prices. Sodi would try to induce the public to purchase the stock by developing and disseminating promotional and marketing mailers that exaggerated the stock’s prospects for growth and urged readers to purchase it. The mailers would falsely and deceptively conceal and fail to disclose that Sodi intended to sell the stock he was urging others to buy. After the stock price rose, Sodi would sell the stock for a profit.
Sodi hid his ownership interest in the promoted stock by trading through Arliss, a Swiss account, instead of through a brokerage account held in his own name. He brought the proceeds of his fraud back to himself and his publishing houses through offshore accounts held by firms in Switzerland, the Cayman Islands, and elsewhere.
On Jan. 10, 2013, Sodi used the U.S. Postal Service to send mailers promoting the stock of Southern USA, Inc., a company with mining operations in Ashland, Ala., to addresses throughout the country. On March 1, 2013, after the price and volume of trading in SUSA stock had dramatically increased as a result of the promotion, the U.S. Securities and Exchange Commission issued an order suspending trading in SUSA stock. SUSA subsequently laid off most of its workers and suspended its mining operations in Alabama.
If convicted of the charge of conspiracy, Sodi would face a maximum penalty of 25 years in prison and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
The FBI investigated the case, with assistance from the SEC, the Alabama Securities Commission, the U.S. Postal Inspection Service, and the U.S. Attorney’s Offices for the District of New Jersey, the Eastern District of New York, and the Eastern District of Virginia. Assistant U.S. Attorney Jonathan Keim is prosecuting.
An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.