Criminal Justice News

Thursday, July 18, 2019

Texas Man Sentenced for Insider Trading Scheme

Defendant Received Information From Former Investment Bank Analyst Tied to Case Against NFL Linebacker

PHILADELPHIA – United States Attorney William McSwain announced that Hamed Ettu, 44, of Richmond, TX was sentenced today to three years’ probation, the first nine months of which he will be required to serve in home confinement, 120 hours of community service and a fine of $15,000.  U.S. District Judge Gene E.K. Pratter also imposed a forfeiture judgment of $73,244, which the defendant has already paid.

The defendant pleaded guilty in February 2019 to an Information charging him with conspiracy to commit securities fraud. According to the Information, Damilare Sonoiki, charged elsewhere, then a junior analyst at a global investment bank in New York, provided material non-public information to Ettu. Sonoiki obtained this information in violation of his duty of confidentiality that he owed to the investment bank.  In a separate case, Sonoiki also allegedly passed inside information to former Philadelphia Eagles linebacker Mychal Kendricks.

Relying on the material non-public information he received from Sonoiki, Ettu illegally purchased call options in the target companies, Compuware and Move, between July and September 2014.  When proposed mergers were announced for each company, the value of Ettu’s options increased significantly.  During the period of the conspiracy, Ettu made a profit of more than $93,000 on the trades.

“This type of illegal behavior – insider trading based on material, non-public information – undermines faith in our financial markets and harms ordinary investors who play by the rules,” said U. S. Attorney McSwain.  “Prosecuting securities fraud and thereby safeguarding the integrity of the public securities markets has been and will continue to be a top priority of my Office.” 

“The manipulation of our markets undermines all the investors who take great care to play by the rules,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Through cases like this, the FBI continues to work against such corruption to help ensure fairness in the marketplace.”

The case was investigated by Federal Bureau of Investigation and the Securities and Exchange Commission, and is being prosecuted by Assistant United States Attorney David J. Ignall.

22 Los Angeles-Based Members of MS-13 Transnational Gang Named in Federal Racketeering Case that Alleges String of Grisly Murders

          LOS ANGELES – An investigation by federal and local authorities has resulted in a federal racketeering case that charges 22 people linked to the MS-13 transnational gang, most of whom allegedly participated in a series of murders, including several slayings in which victims were hacked to death with machetes in the Angeles National Forest.

          A 12-count indictment unsealed Monday afternoon alleges that members and associates of the gang murdered seven people over the last two years. The indictment charges gang leaders who allegedly authorized and coordinated the murders. Also charged are gang members who allegedly murdered and attempted to murder rival gang members, those who were perceived to be cooperating with law enforcement, and, in one instance, a homeless man who was temporarily living in a park controlled by the gang.

          The indictment focuses on a particularly violent subset of the gang known as the Fulton clique, which operates in the San Fernando Valley and has recently seen an influx of young immigrants from Central America. Under the influence of these young gangsters, younger associates who wanted to become members of MS-13 were “required to kill an MS-13 rival or someone perceived to be adverse to MS-13 to be initiated into MS-13,” according to the indictment.

          In one murder detailed in the indictment, several MS-13 members allegedly targeted a rival gang member who was believed to have defaced MS-13 graffiti. On March 6, 2017, according to the indictment, the rival gang member was abducted, choked, and driven to a remote location in the Angeles National Forest, where six people attacked him with a machete. The victim was dismembered, and his body parts were thrown into a canyon after one of the defendants allegedly cut the heart out of the victim’s body.

          The federal RICO case – which was unsealed Monday during arraignments for three defendants who were taken into custody over the past several days in the Los Angeles area – is the product of an investigation by the Los Angeles Metropolitan Task Force on Violent Gangs, which is made up of special agents with the Federal Bureau of Investigation, officers with the Los Angeles Police Department, and deputies with the Los Angeles County Sheriff’s Department. A fourth defendant was arrested over the weekend in Oklahoma.

          Over the past year, the other 18 defendants named in the indictment were taken into custody, some on state charges and some on federal charges previously filed. The superseding indictment announced today, which was returned by a federal grand jury on July 9, adds 15 defendants to an indictment filed in March.

          “We have now taken off the streets nearly two dozen people associated with the most violent arm of MS-13 in Los Angeles, where the gang is believed to have killed 24 people over the past two years,” said United States Attorney Nick Hanna. “This investigation has been an unqualified success. The collaborative law enforcement effort solved several murder cases and dealt a severe blow to members of the gang who engaged in acts of brutality not seen in the region for over 20 years. The prosecution of these defendants would not have been possible without the backing of local law enforcement, including District Attorney Jackie Lacey, who has supported our efforts every step of the way and has dedicated substantial resources to ensure that all of these defendants get the justice they deserve.”

          “Taking violent offenders off the street should send a message to MS-13 members and their associates that medieval-style violence and senseless murder will not be tolerated in Los Angeles,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Working with our local partners, we expect to impact MS-13’s influence in gang-occupied communities.”

          “The greatest tragedy in these cases is that these young victims likely left their homelands hopeful that in the United States they would find safety and prosperity,” Los Angeles County District Attorney Jackie Lacey said. “Instead, these victims had the misfortune of crossing paths with violent gang members who preyed on the vulnerabilities of their immigrant experience. My office will vigorously prosecute these defendants and continue to work with other agencies to enhance public safety in the communities where MS-13 and other brutal gangs operate.”

          “Today’s charges are the product of diligent work and a steadfast resolve that we will not let violent criminals continue to victimize our residents,” said Los Angeles Police Chief Michel Moore. “It can only be accomplished through the shared vision of our state, local, and federal law enforcement partners.”

          “The Los Angeles County Sheriff’s Department is always willing to work with our local, state and federal law enforcement counterparts to ensure public safety,” said Sheriff Alex Villanueva.

          The 78-page indictment charges all but one of the 22 defendants with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO charge alleges nearly 200 “overt acts,” beginning with the transportation of $1.22 million in narcotics proceeds that were seized in Nebraska in 2010. As part of the RICO conspiracy, members of the gang allegedly committed murders in 2014 and 2015, the second of which is part of a previous racketeering case against the leadership of MS-13 in Los Angeles.

          The majority of the conduct outlined in the indictment – including seven murders – started in 2017 and continued into this year. While the indictment focuses on murders committed to increase the gang’s membership, expand the gang’s power and intimidate outsiders, the RICO charge also alleges drug-trafficking activities, including the sale of narcotics to the Fulton clique in Maryland.

          In addition to the conspiracy charge, the indictment contains four counts of first-degree murder related to machete, knife and baseball bat killings in the Angeles National Forest, which is within the special maritime and territorial jurisdiction of the United States. Those four murders – along with a fifth that occurred in the Malibu hills and a sixth in that was committed in the Fulton clique’s stronghold of Whitsett Fields Park in North Hollywood – are also charged as violent crimes committed in aid of racketeering (VICAR), and those six counts allege that the victims were killed “for the purpose of gaining entry to and maintaining and increasing position in MS-13 Los Angeles.”

          The indictment also contains allegations that the six VICAR murders were committed “in an especially heinous, cruel, or depraved manner in that [they] involved torture or serious physical abuse to the victim.” The 16 defendants charged in relation to those six murders are eligible for the federal death penalty, although the government has not indicated whether it will seek such a sentence for any of the defendants if they are convicted.

          In addition to the RICO case announced today, there are two under-seal cases pending against juvenile defendants in United States District Court.

          In 2017, as the result of another investigation by the Los Angeles Metropolitan Task Force on Violent Gangs, a federal grand jury issued a RICO indictment that targeted MS-13’s leadership across the Los Angeles region. That indictment, which alleged three murders attributed to the Fulton clique, charged 34 defendants, 14 of whom have pleaded guilty. Nineteen of the defendants are currently scheduled for trial on September 24. One defendant in that case – Sergio Alexander Galindo, also known as “Killer” – remains a fugitive.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

          The federal RICO case is being prosecuted by Assistant United States Attorney Joanna Curtis of the Violent and Organized Crime Section and Deputy District Attorneys Eric W. Siddall and Carmelia Mejia, Los Angeles County Deputy District Attorneys who have been designated as Special Assistant United States Attorneys.

Ex-Beverly Hills Stockbroker Convicted of Securities Fraud in $200 Million Portfolio-Pumping Stock Manipulation Scheme

          LOS ANGELES – A former Beverly Hills stockbroker who worked with fugitive hedge fund manager Florian Homm was found guilty by a jury late this afternoon of 18 federal criminal charges for participating in a stock manipulation scheme designed to pump up the reported profits of hedge funds that fraudulently caused investors approximately $200 million in losses.

          Todd Ficeto, 52, of Marion, Ohio, was found guilty after a 17-day jury trial. The jury found Ficeto guilty of one count of conspiracy to commit securities fraud and wire fraud, seven counts of securities fraud, two counts of investment adviser fraud, one count of money laundering conspiracy, five counts of unlawful money transactions, one count of obstruction of justice, and one count of making false statements.

          Ficeto was the president of a Beverly Hills-based broker-dealer, Hunter World Markets, which he co-owned with Florian Wilhelm J├╝rgen Homm, who was first indicted in March 2013 on charges of securities fraud and wire fraud after he was arrested in Italy. Homm later fled to Germany and is a fugitive from justice. Homm was the founder and chief investment officer of Absolute Capital Management Holdings (ACMH), a Cayman Islands-based investment advisor that operated from Palma de Majorca in Spain and managed eight hedge funds (the Absolute Funds).

          Between September 2004 and September 2007, Homm directed the Absolute Funds to buy billions of shares of thinly traded, United States-based “penny stocks” through Hunter World Markets that Ficeto located and brought to Homm through investment banking deals. Ficeto then facilitated the manipulative stock purchases and caused millions of shares of the same penny stocks to be given to Homm, Hunter World Markets, and CIC Global Capital, which was controlled by co-defendants Colin Heatherington, of Port Alberni, British Columbia, Canada; and Craig Heatherington, of Queensland, Australia.

          Ficeto, Homm, and other co-conspirators fraudulently manipulated the penny stocks to inflate and artificially prop up their prices to exaggerate the purported profitability of the Absolute Capital hedge funds. As a result, the co-conspirators were able to sell their own shares of the penny stocks at the inflated prices to the hedge funds. The stock price inflation also served to fraudulently overstate the performance of the hedge funds which, in turn, generated substantial performance fees and other compensation for defendant Homm and his co-conspirators. The co-conspirators then used the inflated performance figures to induce investments from unsuspecting victim-investors.

          Ficeto and his co-conspirators worked together in an elaborate conspiracy to launder the illicit proceeds throughout the world.

          Ficeto also engaged in unlawful monetary transactions by sending nearly $10 million of illicit proceeds to an account in the Cook Islands days before his testimony before the Securities and Exchange Commission, and then lied to the SEC about the Cook Islands account. Ficeto also used a hedge fund called the Hunter Fund, in which the Absolute Funds invested and also was used to conceal investments by the Absolute Funds in the penny stocks and to manipulate the stock market.

          As the scheme unraveled, Homm abruptly resigned from the firm in the middle of the night on September 18, 2007, according to court documents.

          In March 2013, Homm was taken into custody in Italy after being arrested at the Uffizi Gallery in Florence. Homm was arrested pursuant to a provisional arrest warrant sought by federal prosecutors in Los Angeles after they filed a criminal complaint containing charges related to the alleged fraud scheme. The United States sought Homm’s extradition to the United States and he was ordered extradited by the Italian Ministry of Justice, but Homm ultimately was released and is believed to have fled to Germany, where he remains a fugitive.

          Colin Heatherington is in Canada and facing extradition to the United States.

          United States District Judge Virginia A. Phillips has scheduled an October 7 sentencing hearing for Ficeto. Each charge of conspiracy to commit securities fraud and securities fraud carry a statutory maximum penalty of 25 years in federal prison. The money laundering charges each carry a maximum penalty of 10 years in federal prison. Each charge of investment adviser fraud, obstruction of justice, and false statements carry a maximum statutory penalty of five years in federal prison.

          This matter was investigated by Federal Bureau of Investigation. The United States Securities and Exchange Commission, and the Financial and Regulatory Authority provided assistance to the FBI’s investigation.

          This case is being prosecuted by Assistant United States Attorneys Cassie D. Palmer of the Public Corruption and Civil Rights Section, Scott Paetty of the Major Frauds Section, and Ian V. Yanniello of the General Crimes Section.