AJ Discala and four others charged criminally for stock fraud

Again this is a late post. This happened on July 14th. This story received a lot of attention because one of the men charged criminally, AJ Discala, is famous. See the Dealbook article about the case.

SEC press release
SEC complaint
Department of Justice press release

A ten-count indictment was unsealed this morning in federal court in Brooklyn, New York, against seven defendants, Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC (“OmniView”); Marc Wexler, the Managing Director of OmniView; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly traded company; Matthew Bell, a registered broker and investment adviser representative; Craig Josephberg, a registered broker; Kyleen Cane, an attorney; and Victor Azrak, the Vice President and Director of Excel Corp., a publicly traded company. The charges include securities fraud, wire fraud and conspiracy to commit securities fraud, mail fraud and wire fraud in connection with the fraudulent market manipulation of four publicly traded companies—CodeSmart, trading under the ticker symbol ITEN; Cubed, Inc. (“Cubed”), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (“StarStream”), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (“Staffing Group”), trading under the ticker symbol TSGL. In addition, the government restrained Discala’s residence in Norwalk, Connecticut, worth over $1 million, and seized a dozen bank and brokerage accounts containing criminal proceeds.

As alleged in the indictment and other court filings, between October 2012 and July 2014, the defendants, together with others, agreed to defraud investors and potential investors in four public companies: CodeSmart, Cubed, StarStream and Staffing Group (collectively, the “Manipulated Public Companies”) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through, among other things: (a) false and misleading press releases; (b) false and misleading SEC filings; (c) fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests; (d) engineering price movements and trading volume in the stocks; and (e) unauthorized purchases of stock in accounts of unwitting investors.

Here is the chart of one of the allegedly manipulated stocks, Codesmart:

iten

See the criminal complaint:

USA v. Discala Et Al Doc 1 Filed 15 Jul 14 by Shannon Coleman

Disclaimer: I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

One thought on “AJ Discala and four others charged criminally for stock fraud”

  1. Pacer update – 18 Jul 14 USA v. Discala et al CRIMINAL DOCKET FOR CASE #: 1:14-cr-00399-ENV All Defendants

    https://ecf.nyed.uscourts.gov/cgi-bin/iquery.pl

    Date Filed # Docket Text

    08/04/2014 47 NOTICE OF ATTORNEY APPEARANCE: Renato C. Stabile appearing for Matthew Bell (Piper, Francine) (Entered: 08/05/2014)

    08/04/2014 46 REDACTION by Matthew Bell to 45 Sealed, Order Setting Conditions of Release (Piper, Francine) (Entered: 08/05/2014)

    08/04/2014 45 ORDER Setting Conditions of Release as to Matthew Bell (4) $1,000,000. Ordered by Chief Mag. Judge Steven M. Gold on 8/4/2014. (Piper, Francine) (Entered: 08/05/2014)

    08/04/2014 44 ORDER TO CONTINUE – Ends of Justice as to Matthew Bell Time excluded from 8/4/14 until 8/15/14.. Ordered by Chief Mag. Judge Steven M. Gold on 8/4/2014. (Piper, Francine) (Entered: 08/05/2014)

    08/04/2014 43 Minute Entry for proceedings held before Chief Mag. Judge Steven M. Gold:Arraignment as to Matthew Bell (4) Count 1,2,3-4 held on 8/4/2014, Initial Appearance as to Matthew Bell held on 8/4/2014, Plea entered by Matthew Bell (4) Count 1,2,3-4. by Matthew Bell Not Guilty to all counts. Dft released on $1 million PRB with some conditions. Order of Speedy Trial entered Start 8/4/14 Stop 8/15/14. Status Conference 8/15/14 at 10:00 before Judge Vitaliano. AUSA Walter Norkin; Defense Counsel, Renato Stabile. (Piper, Francine) (Entered: 08/05/2014)

    07/31/2014 40 NOTICE OF ATTORNEY APPEARANCE Walter M. Norkin appearing for USA. (Norkin, Walter) (Entered: 07/31/2014)

    07/30/2014 35 NOTICE OF ATTORNEY APPEARANCE Shannon Cassandra Jones appearing for USA. (Jones, Shannon) (Entered: 07/30/2014)

    07/29/2014 39 REDACTION by Kyleen Cane to 38 Sealed, Order Setting Conditions of Release (Greene, Donna) (Entered: 07/31/2014)

    07/29/2014 38 ORDER Setting Conditions of Release as to Kyleen Cane (6) $1,000,000. Ordered by Magistrate Judge Ramon E. Reyes, Jr on 7/29/2014. (Greene, Donna) (Entered: 07/31/2014)

    07/29/2014 37 Application and Order of Excludable Delay as to Kyleen Cane Time excluded from 7/29/14 until 8/15/14. Ordered by Magistrate Judge Ramon E. Reyes, Jr on 7/29/2014. (Greene, Donna) (Entered: 07/31/2014)

    07/29/2014 36 Minute Entry for proceedings held before Magistrate Judge Ramon E. Reyes, Jr:AUSA Walter Norkin and Shannon Jones. Seth Levine for the deft.Arraignment as to Kyleen Cane (6) Count 1,2,4 held on 7/29/2014, Initial Appearance as to Kyleen Cane held on 7/29/2014, Plea entered by Kyleen Cane (6) Count 1,2,4. by Kyleen Cane Not Guilty on counts All Counts. (Tape #11:28 – 11:57.) (Greene, Donna) (Entered: 07/31/2014)

    07/29/2014 34 NOTICE OF ATTORNEY APPEARANCE: Benjamin Brafman appearing for Victor Azrak (Brafman, Benjamin) (Entered: 07/29/2014)

    07/29/2014 33 NOTICE OF ATTORNEY APPEARANCE: E. Scott Morvillo appearing for Craig Josephberg (Morvillo, E.) (Entered: 07/29/2014)

    07/29/2014 32 NOTICE OF ATTORNEY APPEARANCE: Amy Lynn Walsh appearing for Craig Josephberg (Walsh, Amy) (Entered: 07/29/2014)

    07/28/2014 31 NOTICE OF ATTORNEY APPEARANCE: Seth L. Levine appearing for Kyleen Cane (Levine, Seth) (Entered: 07/28/2014)

    07/28/2014 29 TRANSCRIPT of Proceedings as to Abraxas J. Discala held on 7/23/14, before Judge Azrack. Court Reporter/Transcriber TYPEWRITE WORD PROCESSING SERVICE, Telephone number 718-966-1401. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 8/18/2014. Redacted Transcript Deadline set for 8/28/2014. Release of Transcript Restriction set for 10/27/2014. (Hong, Loan) (Entered: 07/28/2014)

    07/28/2014 28 ORDER Setting Conditions of Release as to Victor Azrak (7) $1,000,000 Secured Appearance Bond. Ordered by Magistrate Judge Robert M. Levy on 7/17/2014. (Piper, Francine) (Entered: 07/28/2014)

    07/25/2014 27 Minute Entry for proceedings held before Magistrate Judge Joan M. Azrack:Bond Hearing as to Victor Azrak held on 7/25/2014. Suretor Sarah Azrak sworn and advised of bond obligations by the court and signed the bond. AUSA not listed; Defense Counsel, not listed. (Tape #2:46 – 2:48.) (Piper, Francine) (Entered: 07/28/2014)

    07/25/2014 26 Rule 5(c)(3) Documents Received as to Matthew Bell (Greene, Donna) (Entered: 07/25/2014)

    07/24/2014 25 NOTICE OF ATTORNEY APPEARANCE: Marc A. Agnifilo appearing for Victor Azrak (Agnifilo, Marc) (Entered: 07/24/2014)

    07/23/2014 42 REDACTION by Abraxas J. Discala to 41 Sealed, Order Setting Conditions of Release (Piper, Francine) (Entered: 08/04/2014)

    07/23/2014 41 ORDER Setting Conditions of Release as to Abraxas J. Discala (1) Secured Appearance Bond. Ordered by Magistrate Judge Joan M. Azrack on 7/23/14. (Piper, Francine) (Entered: 08/04/2014)

    07/23/2014 24 NOTICE of Change of Attorney’s firm and address by Victor Azrak (Gardner, Alexander) (Entered: 07/23/2014)

    07/23/2014 23 NOTICE OF ATTORNEY APPEARANCE: Joseph Tacopina appearing for Abraxas J. Discala (Greene, Donna) (Entered: 07/23/2014)

    07/23/2014 22 Application and Order of Excludable Delay as to Abraxas J. Discala Time excluded from 7/23/14 until 8/15/14.Ordered by Magistrate Judge Joan M. Azrack on 7/23/2014. (Greene, Donna) (Entered: 07/23/2014)

    07/23/2014 21 Minute Entry for proceedings held before Magistrate Judge Joan M. Azrack:AUSA Walter Norkin/Shannon Jones. Joseph Tacopins for the deft.Arraignment as to Abraxas J. Discala (1) Count 1,2,3-4,5-10 held on 7/23/2014, Initial Appearance as to Abraxas J. Discala held on 7/23/2014, Plea entered by Abraxas J. Discala (1) Count 1,2,3-4,5-10. by Abraxas J. Discala Not Guilty on counts All Counts., ( Status Conference set for 8/15/2014 10:00 AM in Courtroom 4C South before Judge Eric N. Vitaliano.) (Tape #11:17-12:01.) (Greene, Donna) (Entered: 07/23/2014)

    07/23/2014 20 NOTICE OF ATTORNEY APPEARANCE: Craig Carpenito appearing for Marc Wexler (Greene, Donna) (Entered: 07/23/2014)

    07/23/2014 19 ORDER TO CONTINUE – Ends of Justice as to Marc Wexler Time excluded from 7/23/14 until 8/15/14. Ordered by Magistrate Judge Joan M. Azrack on 7/23/2014. (Greene, Donna) (Entered: 07/23/2014)

    07/23/2014 18 Minute Entry for proceedings held before Magistrate Judge Joan M. Azrack:AUSA Walter Norkin/Shannon Jones. Craig Carpenito for the deft.Arraignment as to Marc Wexler (2) Count 1,2,3-4,5,10 held on 7/23/2014, Initial Appearance as to Marc Wexler held on 7/23/2014, Plea entered by Marc Wexler (2) Count 1,2,3-4,5,10. by Marc Wexler Not Guilty on counts All Counts. ( Status Conference set for 8/15/2014 10:00 AM in Courtroom 4C South before Judge Eric N. Vitaliano.) (Tape #11:17-12:01.) (Greene, Donna) (Entered: 07/23/2014)

    07/18/2014 17 ORDER that the government may furnish copies of the orders, applications and affidavits listed. ** See attached Order for details **. Ordered by Magistrate Judge Robert M. Levy on 7/17/2014. (Greene, Donna) (Entered: 07/18/2014)

    07/18/2014 6 NOTICE OF ATTORNEY APPEARANCE: David Usher Gourevitch appearing for Ira Shapiro (Piper, Francine) (Entered: 07/18/2014)
    07/17/2014 30 REDACTION by Victor Azrak to 28 Sealed, Order Setting Conditions of Release (Piper, Francine) (Entered: 07/28/2014)
    07/17/2014 16 ORDER FOR ACCEPTANCE OF CASH BAIL as to Craig Josephberg. Ordered by Magistrate Judge Robert M. Levy on 7/17/2014. (Greene, Donna) (Entered: 07/18/2014)

    07/17/2014 15 Application and Order of Excludable Delay as to Craig Josephberg Time excluded from 7/17/14 until 8/15/14. Ordered by Magistrate Judge Robert M. Levy on 7/17/2014. (Greene, Donna) (Entered: 07/18/2014)

    07/17/2014 14 NOTICE OF ATTORNEY APPEARANCE: Gregory Morvillo appearing for Craig Josephberg (Greene, Donna) (Entered: 07/18/2014)

    07/17/2014 13 Minute Entry for proceedings held before Magistrate Judge Robert M. Levy:AUSA Walter Norkin,Shannon Jones, Winston Paes. Greg Morvillo for the deft.Allocution as to Craig Josephberg held on 7/17/2014, Arraignment as to Craig Josephberg (5) Count 1,2,3-4,9 held on 7/17/2014, Initial Appearance as to Craig Josephberg held on 7/17/2014, Plea Agreement Hearing as to Craig Josephberg held on 7/17/2014, Plea entered by Craig Josephberg (5) Count 1,2,3-4,9. by Craig Josephberg Not Guilty on counts ALL COUNTS. Status conference set for 8/15/14 at 10:00 before Judge Vitaliano. (Tape #3:39 – 3:58.) (Greene, Donna) (Entered: 07/18/2014)

    07/17/2014 12 ORDER TO CONTINUE – Ends of Justice as to Victor Azrak Time excluded from 7/17/14 until 8/15/14.. Ordered by Magistrate Judge Robert M. Levy on 7/17/2014. (Piper, Francine) (Entered: 07/18/2014)

    07/17/2014 11 NOTICE OF ATTORNEY APPEARANCE: Alexander Howard Gardner appearing for Victor Azrak (Piper, Francine) (Entered: 07/18/2014)

    07/17/2014 10 Minute Entry for proceedings held before Magistrate Judge Robert M. Levy:Arraignment as to Victor Azrak (7) Count 1,2,4,7 held on 7/17/2014, Initial Appearance as to Victor Azrak held on 7/17/2014, Plea entered by Victor Azrak (7) Count 1,2,4,7. by Victor Azrak Not guilty to all counts., ( Status Conference set for 8/15/2014 10:00 AM in Courtroom 4C South before Judge Eric N. Vitaliano.) AUSA Walter Norkin, Shannon Jones; Defense Counsel, Elliott Sagor. (Tape #3:39 – 3:53.) (Piper, Francine) (Entered: 07/18/2014)

    U.S. District Court
    Eastern District of New York (Brooklyn)

    CRIMINAL DOCKET FOR CASE #: 1:14-cr-00399-ENV All Defendants
    Case title: USA v. Discala et al

    Date Filed: 07/15/2014
    Assigned to: Judge Eric N. Vitaliano

    Defendant (1)
    Abraxas J. Discala
    also known as
    “AJ Discala”
    represented by Joseph Tacopina
    Law Offices of Joseph Tacopina, P.C.
    275 Madison Avenue
    35th Floor
    New York, NY 10016
    212-227-8877
    Fax: 212-619-1028
    Email: info@tacopinalaw.com
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (3-4)
    FRAUD BY WIRE, RADIO, OR TELEVISION
    (5-10)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (2)
    Marc Wexler
    represented by Craig Carpenito
    Alston & Brid, LLP
    90 Park Avenue
    New York, NY 10016
    212-210-9400
    Fax: 212-210-9444
    Email: craig.carpenito@alston.com
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (3-4)
    FRAUD BY WIRE, RADIO, OR TELEVISION
    (5)
    FRAUD BY WIRE, RADIO, OR TELEVISION
    (10)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (3)
    Ira Shapiro
    represented by David Usher Gourevitch
    Stueve Helder Siegel
    805 Third AVenue
    New York, NY 10022
    212-355-1300
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (3)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (4)
    Matthew Bell
    represented by Renato C. Stabile
    Gerald B. Lefcourt, P.C.
    148 East 78th Street
    New York, NY 10075
    212-737-0400
    Fax: 212-988-6192
    Email: stabile@lefcourtlaw.com
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (3-4)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (5)
    Craig Josephberg
    also known as
    “Jobo”
    represented by Amy Lynn Walsh
    Morvillo LLP
    One World Financial Center
    27th Floor
    New York, NY 10281
    212-796-6347
    Fax: 212-400-4243
    Email: awalsh@morvillolaw.com
    ATTORNEY TO BE NOTICED

    E. Scott Morvillo
    Morvillo LLP
    565 Fifth Avenue
    New York, NY 10017
    212-880-9494
    Fax: 212-856-9494
    Email: smorvillo@morvillolaw.com
    ATTORNEY TO BE NOTICED

    Gregory Morvillo
    Morvillo LLP
    565 Fifth Avenue
    New York, NY 10017
    212-856-9600
    Fax: 212-856-9494
    Email: gmorvillo@morvillolaw.com
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (3-4)
    FRAUD BY WIRE, RADIO, OR TELEVISION
    (9)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (6)
    Kyleen Cane
    represented by Seth L. Levine
    Levine Lee LLP
    666 Fifth Avenue
    New York, NY 10103
    212-223-4400
    Fax: 212-223-4425
    Email: slevine@levinelee.com
    LEAD ATTORNEY
    ATTORNEY TO BE NOTICED

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (4)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None
    Assigned to: Judge Eric N. Vitaliano

    Defendant (7)
    Victor Azrak
    represented by Benjamin Brafman
    Brafman & Ross, P.C.
    767 Third Avenue
    26th Floor
    New York, NY 10017
    (212) 750-7800
    Fax: (212) 750-3906
    Email: bbrafman@braflaw.com
    LEAD ATTORNEY
    ATTORNEY TO BE NOTICED

    Alexander Howard Gardner
    Mintz & Gold LLP
    470 Park Ave South
    Suite 10n
    New York, NY 10016
    (212)696-4848
    Fax: (212)696-1231
    Email: gardner@mintzandgold.com
    ATTORNEY TO BE NOTICED
    Designation: Retained

    Marc A. Agnifilo
    Brafman & Associates
    767 Third Avenue
    New York, NY 10017
    212-750-7800
    Fax: 212-750-3906
    Email: magnifilo@braflaw.com
    ATTORNEY TO BE NOTICED

    Pending Counts
    Disposition
    CONSPIRACY TO DEFRAUD THE UNITED STATES
    (1)
    ATTEMPT AND CONSPIRACY TO COMMIT MAIL FRAUD
    (2)
    MANIPULATIVE AND DECEPTIVE DEVICES
    (4)
    FRAUD BY WIRE, RADIO, OR TELEVISION
    (7)

    Highest Offense Level (Opening)
    Felony

    Terminated Counts
    Disposition
    None

    Highest Offense Level (Terminated)
    None

    Complaints
    Disposition
    None

    Plaintiff
    USA
    represented by Winston M. Paes
    United States Attorneys Office
    Eastern District of New York
    271 Cadman Plaza East
    Brooklyn, NY 11201
    718-254-7000
    Fax: 718-254-7499
    Email: winston.paes@usdoj.gov
    LEAD ATTORNEY
    ATTORNEY TO BE NOTICED
    Designation: Government Attorney

    Shannon Cassandra Jones
    United States Attorneys Office
    Criminal Division
    Eastern District of New York
    271 Cadman Plaza East
    Brooklyn, NY 11201-1820
    (718) 254-6379
    Fax: (718) 254-6481
    Email: shannon.jones@usdoj.gov
    ATTORNEY TO BE NOTICED

    Walter M. Norkin
    United States Attorneys Office
    EDNY
    Eastern District of New York
    271 Cadman Plaza East
    Brooklyn, NY 11201-1820
    718-254-6152
    Fax: 718-254-6076
    Email: walter.norkin@usdoj.gov
    ATTORNEY TO BE NOTICED

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