BULLETIN: Prosecutors, FBI Say Man Engineered $28 Million Securities Fraud By Manipulating Court With Aid Of ‘Sham Lawsuits’ Brought By ‘Florida-Based Lawyers’ Who Obtained ‘Pleadings From A Single Manhattan-Based Law Firm’
BULLETIN: The former president and chief executive officer of Unico Inc. in San Diego has been indicted on federal charges of conspiracy to commit securities fraud and obstruction of justice, amid spectacular allegations of legal chicanery.
Mark Anthony Lopez was accused of conspiring with New Jersey-based stock trader Mark Allen Lefkowitz to manipulate the share price and volume of Unico’s stock to benefit corporate insiders at the expense of shareholders. Lefkowitz already has pleaded guilty.
Among the stunning allegations is that Lopez and Lefkowitz manipulated a court in Florida into approving litigation settlements while not revealing they effectively were staging lawsuits as part of a conspiracy to exploit an SEC loophole.
From a statement by U.S. Attorney Laura E. Duffy of the Southern District of California (italics added):
To carry out the fraud, Lopez and Lefkowitz exploited Section 3(a)(10) of the Securities Act of 1933 C a little-known provision that allows companies to issue unregistered shares of stock to settle “bona fide” debts. Lopez, on behalf of Unico, would enter into purported loan agreements with various shell corporations owned by Lefkowitz, most of which were based in the Turks and Caicos Islands. It was understood by the conspirators that Unico would purposefully default on the loan agreements so that Lefkowitz’s companies could initiate sham lawsuits against Unico.
Each and every one of these sham lawsuits would be brought by Florida-based lawyers in a Sarasota, Florida court. The Florida attorneys, even though they represented opposite sides in the lawsuits, would obtain their pleadings from a single Manhattan-based law firm that oversaw the sham lawsuits. Very soon after each lawsuit was filed — and typically within the very same week — Lopez and Lefkowitz would draft a written settlement agreement. The terms of the written settlement agreement would be extremely favorable to Lefkowitz. In short, Lopez would agree to settle Unico’s debt by issuing unregistered shares of stock worth on average seven times the debt that Unico actually owed. According to a secret side-agreement with Lopez, Lefkowitz would sell the shares on the open market to unsuspecting buyers and kick back a portion of the proceeds to Unico. This kickback would take the form of a new loan — which would have the added benefit of continuing the fraud scheme.”
Lopez, prosecutors said, also sought to obstruct an SEC probe by “refusing to turn over emails, which he printed and concealed in two manila folders marked ‘Files Deleted’ and another marked ‘Not Released to SEC Subpoena (Delete).'”
More obstruction occurred when Lopez “redacted portions of an email and tried to delete it from his computer, and later lied to the SEC under oath during deposition testimony,” prosecutors said.
He potentially faces up to 65 years in federal prison, if convicted on all counts, prosecutors said.
Duffy’s office said that the alleged misdeeds of Lopez attacked “the very heart” of the U.S. financial system.
“When these corporate leaders ignore that duty and use their positions to enrich insiders, it not only harms shareholders, but also threatens to undermine confidence in our financial markets and slows our country’s ongoing economic recovery,” Duffy said.
