Risk & Compliance

Nine Charged in $131M Stock Fraud Scheme

ForceField Energy's ex-chairman allegedly paid a publisher and others to hype its stock in exchange for kickbacks they did not disclose.
Matthew HellerMay 4, 2016

An investment newsletter publisher and eight other people have been charged with taking part in a $131 million scheme to manipulate the stock of ForceField Energy in exchange for kickbacks from the LED lighting provider’s majority shareholder.

The U.S. Securities and Exchange Commission said in a civil complaint that ForceField’s then-chairman Richard St. Julien paid publisher Christopher Castaldo about $241,000 to tout the stock in his “Wall Street Buy Sell Hold” newsletter and more than $183,000 to solicit his readers to invest in the company.

The other defendants include purported investment relations adviser Jared Mitchell, five brokers and two stock promoters. All nine were also charged Tuesday in a parallel criminal case.

“We allege that these men sold investors on the merits of buying ForceField Energy stock while leaving out the most important detail of all: they were being bribed with money and other benefits behind the scenes to tell them that,” Andrew M. Calamari, director of the SEC’s New York regional office, said in a news release.

Castaldo allegedly told readers only that he had been paid a $7,500 “advertising fee” and 10,000 shares of restricted ForceField shares.

St. Julien was arrested in April 2015 on criminal charges of scheming from August 2012 to manipulate ForceField’s stock price. According to the SEC, the scheme involving Castaldo was one of three that were “fraught with cash bribes and other kickbacks to registered representatives and unregistered brokers who solicited investors to buy stock in ForceField.”

“Some of the perpetrators attempted to evade law enforcement by going so far as to communicate with prepaid disposable ‘burner’ phones and encrypted, content-expiring text messages,” the agency said.

Mitchell, the principal of Excelsior Global Advisors, teamed up with brokers to dupe the brokers’ clients into purchasing more than 425,000 ForceField shares at a cost of more than $3 million, according to federal prosecutors in Brooklyn, N.Y.

In the other alleged scheme, the SEC said stock promoter Herschel C. (Tres) Knippa went so far as to appear on the Fox Business Network’s “Varney & Co.” show to tout ForceField as a great investment.