Wall St. Firm Named In Criminal Indictment

Attorney General Spitzer today announced the indictment of a Wall Street firm and five of its employees on charges of Enterprise Corruption for running a stock fraud scheme that defrauded investors out of more than a million dollars.

"Fraud in the sale of securities threatens the integrity of the nation's financial system," Spitzer said. "This indictment reflects my office's continued commitment to protecting unsuspecting investors from unscrupulous brokerage firms and to restoring investor confidence in the securities markets."

Spitzer also thanked the NASD criminal prosecutions assistance unit for its assistance during the investigation.

The indictment alleges that five brokers at Mason Hill & Co., Inc. were members of a criminal enterprise that defrauded investors. The defendants manipulated stock prices and defrauded the public in the trading of NASDAQ stocks.

The defendants are charged with manipulating the market price of the stocks of companies such as Pride Automotive Group, Inc.; Lexington Healthcare Group, Inc.; Rockwell Medical Technologies, Inc.; Hungarian Broadcasting Company, Inc.; Tellurian, Inc.;and Digital Data Networks, Inc.

The indictment also alleges that the stockbrokers violated their duty to act in the best interests of their customers. Stockbrokers and other Mason Hill employees allegedly induced clients to invest in stocks that brokers knew were not in the customers' best interests. The indictment further alleges that customers were falsely led to believe their investments were in long term growth stocks, when, in fact, the investments were in highly speculative, volatile stocks that were inappropriate for many investors.

The defendant company, Mason Hill, was located at 110 Wall Street, until March 2001, when it closed its business. The defendant brokers are: Christopher Kinsley, 46, of Hewlett Harbor, New York; James Staff, 62, of Bronxville, New York; Adam Kaplan, 30, of Manalapan, New Jersey; Darwin Martinez, 38, of Queens Village, New York; and Gerard Celmer, 39, of Summit, New Jersey. They face multiple charges including: Enterprise Corruption; Grand Larceny in Third Degree; and Fraud in the Sale of Securities. Enterprise Corruption is a class B felony and carries a maximum penalty of 8 1/3 to 25 years in prison.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent until proven guilty.

The case was handled by Assistant Attorneys General Felice Sontupe and Scott Andersen of the Attorney General's Securities Prosecution Unit.

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