Articles Posted in Securities Fraud

Clark Mitchell, a South Florida physician, has pleaded guilty to two criminal counts related to a $1 billion viatical sales scheme connected to death benefits company Mutual Benefits Corp. The company has been shut down by state and federal authorities.

In a plea agreement announced at the U.S. District Court for the Southern District of Florida, Mitchell pleaded guilty to one count of conspiracy to commit health care fraud and one count of securities fraud.

The South Florida physician faces a 10-year prison sentence-to be determined in March. He is being ordered to pay a fine of more than $5 million. Also as part of the plea agreement, Mitchell will be responsible for some $367 million in restitution to Mutual Benefits Corp. investors, as well as over $500,000 in health care fraud restitution.

In California, four stockbrokers who were convicted for securities fraud and conspiracy because of their roles in a “pump-and-dump” scheme that cost investors over $5 million will be sentenced this year.

According to the U.S. Attorney’s Office, the four men worked for Hampton Porter Investment Bankers LLC, a San Diego-based company that failed to disclose the company’s financial interests in certain stocks when it sold these particular stocks to clients.

Hampton Porter allegedly held sales meetings where co-owner John Laurienti and former Hampton Porter retail manager James Green pressured brokers to sell “house stocks.” Brokers who sold these stocks were paid “special incentive” compensation that customers didn’t know about. Hampton Porter also had a “no net-sales” policy that prevented customers from selling their house stocks’ shares because brokers delayed or failed to make sell orders. Brokers from Hampton Porter also engaged in cross-trading, which consists of selling one client’s shares to another client.