(June 15) – “Prosecutors have charged dozens of people with using stock manipulation, fraud and violence to steal from thousands of investors across the country in a scheme that federal authorities are calling one of organized crime’s most aggressive forays into the stock market,” writes John Sullivan and Alex Berenson in today’s New York Times.

“The authorities said their investigation swept up one high-ranking member and several lower-level members of New York’s organized-crime families, as well as brokers, stock promoters and a retired police officer who served as treasurer of the New York City detectives union.”

“At the center of the investigation is a Manhattan investment firm, DMN Capital Investments, which prosecutors said was infiltrated by mob associates and eventually became a creature of their attempts to defraud investors. In an indictment filed in Federal District Court in Manhattan, prosecutors charged 21 people with conducting a racketeering enterprise based at DMN.”

“‘It was an investment bank to the crooked and corrupt,’ United States Attorney Mary Jo White said at a news conference yesterday. ‘DMN was fraud central.'”

“Federal agents charged that the defendants used a range of schemes to defraud investors, from running traditional high-pressure boiler-room sales operations to bribing brokers and creating phony stock trades. Such tactics would artificially inflate the price of stocks, which could then be sold at an illicit profit, the indicitment said. Not all the schemes were directly related, prosecutors said. They said federal agents learned of the other cases through their investigation of DMN, which began over a year ago.”

“The indictment charged that the DMN conspirators used organized- crime ties to ‘instill fear in brokers and other market participants who did business with the enterprise.’ Prosecutors charged that members of the conspiracy used beatings and threats to ensure that brokers and stock promoters followed through on promises to cooperate with the fraud in exchange for bribes.”

“Prosecutors estimated that the fraud cost investors about $50 million, though they said millions of dollars more would have been lost if the investigation had not stopped a number of frauds before they could come to fruition. The prosecutors estimated that about $25 million of the losses was tied to organized — crime members or associates.”