CLEVELAND – The last of six men from Florida has pleaded guilty to his role in a scheme to manipulate the stock prices of publicly traded “penny stock” companies based in Florida, Colorado, and Wyoming. The stocks were sold at inflated prices to victim investors throughout the country, including in the Northern District of Ohio. Charles Vaccaro, 68, of Sunny Isles Beach, Florida, pleaded guilty to Conspiracy to Commit Securities Fraud. Judge Solomon Oliver Jr. accepted Vaccaro’s plea on June 24.In addition, the co-defendants below previously pleaded guilty to the following charges:Dror Svorai, 57, of Hollywood, Florida - Conspiracy to Commit Securities Fraud, Securities Fraud, , Conspiracy to Commit Wire Fraud, Wire Fraud, and Conspiracy to Launder Monetary Instruments.Dennis Ruggeri, 80, of Sunny Isles Beach, Florida - Conspiracy to Commit Securities Fraud and Conspiracy to Commit Wire Fraud.Kevin Hagen, 57, of Davie, Florida - Conspiracy to Commit Securities Fraud.Gary Berlly, 74, of Plantation, Florida - Conspiracy to Commit Securities Fraud.
Yosef Biton 45, of Sunny Isles, Florida - Conspiracy to Commit Securities Fraud.Eli Taieb, 52, of Davie, Florida - Conspiracy to Commit Securities Fraud (charged separately).According to court documents and evidence presented in Court, from approximately January 2014 to July 2019 the defendants intentionally conspired, along with others, to defraud victims who bought shares of stock in public companies whose share prices the conspirators were manipulating. The companies were traded on the OTC Markets, which typically serve smaller public companies that don’t qualify to be traded through traditional U.S. stock exchanges.. The defendants acquired small publicly-traded companies, issued millions of shares to themselves and to friends, relatives, and other nominees at little or no cost, and then artificially controlled the price and volume of shares through a number of tactics. One method they used was through promotional media efforts designed to generate public interest and increase the price and trading volumes in the stock.
The defendants had the ability to influence or control the authorship, timing, and content of the press releases and promotions, which were issued by the same companies whose stock they were selling. Because the defendants or their nominees controlled significant amounts of stock, they coordinated the sale of large blocks of shares to coincide with the press releases and promotions to entice would-be investors to purchase the stock. The defendants also provided false and misleading information to attorneys and brokers to conceal their true relationship to the companies, which allowed them to deposit and sell stock they would not otherwise have been able to sell. The defendants then profited by selling stock on the public market at artificially inflated prices without disclosing that they controlled both the stock and the companies themselves, or that they were artificially manipulating the companies’ stock prices.
Once the defendants stopped promoting the stock, the stock price fell, causing investors to lose money. The defendants used the profits from their scheme to enrich themselves and fund luxurious lifestyles.Among the items seized during the investigation, and later ordered forfeited, were:$236,131.05 from a bank account2016 Range Rover vehicle, purchased for $90,327.792018 Rolls Royce Dawn vehicle, purchased for $376,660.942019 Porsche 911 vehicle, purchased for $164,481.142018 Tesla Model S 100D vehicle, purchased for $116,919.832001 Azimut 70’ yacht, purchased for $265,925 AB JET 330 dinghy, purchased for $28,670.00. In total, investors lost more than $26 million as a result of the scheme.Each defendant’s sentence is determined by the Court after a review of factors unique to the case, including prior criminal record, if any, role in the offense, and characteristics of the offense. Berlly was sentenced to 18 months of probation and ordered to pay $18,063.14 in restitution.
Hagen was sentenced to one year and one day in prison and three years of supervised release. He was also ordered to pay a $15,000 fine and $2,033,442.04 in restitution. Biton was sentenced to six months in prison and three years of supervised release. He was also ordered to pay a $10,000 fine and $392,000 in restitution.
This case was investigated by the Cleveland Division of the Federal Bureau of Investigation.This case was prosecuted by Assistant United States Attorneys Erica Barnhill, Brenna Fasko, and James Morford.