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Ex-Husband of 'Soprano' Star Charged in 'Pump and Dump' Stock Scam


Pump and dump scams are nothing new to Wall Street. The latest one allegedly involves the ex husband of "Sopranos" star Jamie-Lynn Sigler and is right out of the fraud play book.

A street sign for Wall Street hangs outside the New York Stock Exchange on September 16, 2013 in New York City. Five years after the beginning of the financlial crisis marked by the bankrupcy of Lehman Brothers, Wall Street has more than recovered its losses, although unemployment in the United States remains high. (Photo by John Moore/Getty Images)

Pump and dump scams are nothing new to Wall Street.

The latest one, allegedly involving the ex husband of "Sopranos" star Jamie-Lynn Sigler, is right out of the fraud play book.

Get investors excited about a penny stock, promote the company with press releases and rumors, make huge purchases of the thinly traded stock driving the prices up, and then dump your shares when your clients rush in to make a killing.

Unfortunately the only ones getting killed are the investors who bought all their shares from the fraudsters who were only too willing to sell them all they owned.

(Photo by John Moore/Getty Images) (Photo by John Moore/Getty Images)

In the early 1900's, syndicates pulled off this same maneuver with the help of newspaper reporters who were more than willing to spread rumors - for a price. Stocks would suddenly become "in play" and the public, novice and professional investors alike, would rush in to buy the very active shares. Syndicates would "paint the tape" with prearranged purchases of huge blocks of shares in the companies they wanted to put in play.

The public, seeing the tape action would rush in and drive the prices of the securities every higher. When the time was ripe for a killing, the syndicate members would gladly sell their shares to the public who could not seem to get enough of them. And the story always ended the same way - investors would be left holding the proverbial empty bag.

Abraxas J. Driscala, CEO of OmniView Capital Advisors, and six other individuals were charged with stock manipulation in a 10-count indictment unsealed in Brooklyn, New York Friday. Driscala was at one time married to Jamie-Lynn Sigler who played Meadow Soprano on HBO.

Only last year, seven individuals were charged with a $140 million penny stock fraud scheme in Brooklyn federal court. Penny stocks were allegedly sold in 35 countries. In January of this year, David Levy was sentenced to nine years in prison by a Manhattan federal court for another pump and dump scam.

As usual, the Securities and Exchange Commission was late to the game, filing a separate civil case against five of the defendants, including Discala.

 (AP Photo/Richard Drew) (AP Photo/Richard Drew)

Why can't the SEC do a more effective job in monitoring the stock market? Enforcement actions are down considerably at the SEC, leaving the brunt of the work to federal prosecutors and state securities regulators.

According to the FBI's latest "Financial Crimes Report to the Public", investment fraud has increased by 52 percent since 2008. Investment fraud is quite underreported, so that makes the increase all the more meaningful. Unfortunately, the prime targets for fraudsters are retired citizens and seniors, who are the least able to recover from financial loss.

The best way to avoid becoming a victim to penny stock fraud is to avoid the game entirely. Additionally, don't get caught in the game of chasing headlines, by the time the news is out, it's too late.

The world's capital is continually seeking a home, and if our markets appear rigged then capital will find its way to other places to invest. Asia, and European borses are competing for the world's dollars.

It is of vital importance that we maintain the integrity of our financial markets if we want to maintain our status as the world's leader in capital formation.

John Lawrence Allen, a nationally recognized legal expert, represents investors nationwide in securities arbitration. Mr. Allen’s second book, "Make Wall Street Pay You Back," was just released. For more information visit www.MakeWallStreetPayYouBack.com

TheBlaze contributor channel supports an open discourse on a range of views. The opinions expressed in this channel are solely those of each individual author.

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