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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of New York

Wednesday, January 31, 2018

Florida Man Sentenced In Penny Stock Scheme

CONTACT:      Barbara Burns
PHONE:         (716) 843-5817
FAX:            (716) 551-3051

BUFFALO, N.Y.-U.S. Attorney James P. Kennedy, Jr. announced today that James Palladino, 54, of Delray Beach, Florida, who was convicted of conspiracy to engage in monetary transactions, was sentenced by Senior U.S. District Judge William M. Skretny to six months in prison and ordered to forfeit $175,000.

Assistant U.S. Attorney Aaron J. Mango, who handled the case, stated that between February and June of 2011, the defendant and other co-conspirators, participated in a scheme to acquire, manipulate, and trade publicly available stocks of companies with low stock prices (known as "penny stocks"). During the scheme, the defendant and others, directed co-conspirators to issue newsletters containing fictitious and misleading information regarding a targeted stock, which was done in an effort to manipulate the length and intensity of the penny stock promotion scheme. During the scheme, Palladino and others utilized personal brokerage accounts and bank and brokerage accounts in the names of entities they owned and controlled, to fund, trade, and manipulate the price of penny stocks.

During the scheme, the defendant and others made payments totaling $175,000 for the fraudulent stock promotions knowing that the funds used to make the payments constituted criminally derived proceeds from wire fraud activities.

The sentencing is the result of an investigation by Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of James D. Robnett, Special Agent-in-Charge, New York Field Office.

Updated February 1, 2018