Federal Investigation of GBEN Pump-and-Dump Scheme Results in Conviction of Eight Men and Recovery of over $400,000 for Victim Restitution
A Richfield man was charged in a criminal information with selling unregistered securities in which dozens of investors lost about $7 million, law enforcement officials said.
Jerry A. Cicolani, Jr., 51, worked to recruit investors to KGTA Petroleum, Ltd., which was operated by Kenneth A. Grant and others. Grant and others marketed the company to investors as a petroleum company that earned profits by buying and reselling various crude oils and refined fuel products.
Cicolani was a licensed registered representative with PrimeSolutions Securities, Inc., which had officers in Akron and was registered with the Financial Industry Regulatory Authority. Cicolani concealed his outside business interests from PrimeSolutions and had his commissions from KGTA paid to outside entities, according to the information.
KGTA issued securities which were required to be issued with the Securities and Exchange Commission. At no time did Cicolani, or anyone to his knowledge, file any documentation related to the KGTA with the SEC, according to the information.
Cicolani received approximately $5 million in commission fees for enlisting 39 investors, who collectively lost $7 million from their investments with KGTA in unregistered securities, according to the information.
In a related case, Kelly C. Hood, 36, of Naples, Florida, was charged with one count of structuring. Hood, at Cicolani’s direction, structured commission payments made to himself and Cicolani for the sale of unregistered securities of KGTA. This was done to evade bank reporting requirements, according to the information.
Grant has previously pleaded guilty to one count of conspiracy to commit wire fraud and securities fraud and one count of money laundering for his role in the scheme. He is scheduled to be sentenced May 20.
These case are being prosecuted by Assistant U.S. Attorney Mark Bennett and Special Assistant U.S. Attorney Derek Kleinmann following an investigation by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigations.
If convicted, the sentence in this case will be determined by the court after consideration of the Federal Sentencing Guidelines which depend upon a number of factors unique to each case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the unique characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
A charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.