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Prosecutors Charge 120 Suspects in Massive Securities Fraud CrackdownAired June 14, 2000 - 1:28 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU WATERS, CNN ANCHOR: Our top story today: allegations of a crime syndicate's scheme to infiltrate the stock market. Prosecutors say they have filed charges against 120 suspects in what they're calling the largest securities fraud crackdown in U.S. history.
CNN's Allan Dodds Frank is closely watching the story in New York.
Alan, what's it all about?
ALLAN DODDS FRANK, CNN CORRESPONDENT: Lou, a dragnet hit Wall Street. It was the biggest crackdown ever, according to the U.S. attorney, MaryJoe White: 120 people charged with securities fraud, and the crimes went all the way across the board.
And what made this case particularly important, according to the authorities, is it involved not one organized crime family, but all five of the families in New York. And it was coordinated by a gentleman who had an operation set up with a brokerage. Imagine a wheel, and at the hub of the wheel is an investment bank, except it's really a front for organized crime to funnel money from investors.
And I'll explain in a second how the scheme worked. But what was amazing is the FBI cracked it because they got an alleged organized crime family associate infiltrated into that operation, and they bugged the place for six months.
Now, what this scheme involved was getting investors to invest in small-cap stocks, run up the stock prices, sell out the stock that they were secretly holding, and then driving the stock back down to zero.
They also were involved in defrauding union pension funds. And when more than 50 corrupt brokers didn't want to go along, sometimes they were threatened, and there was even a murder plot in all this. It sounds almost like "The Sopranos," doesn't it?
WATERS: It sure does. Who got hurt along the way? Do we know that yet?
FRANK: Well, we know that investors lost at least $50 million over the last five years in a number of these stocks, and including people who were investing in some small Internet stocks, because these guys didn't miss a trick. They were up to date, as well as using the old-fashioned ways of stealing money, Lou.
WATERS: All right, Allan Dodds Frank watching this story in New York. It's a complicated deal, and we'll have more on CNN as the day goes on.
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