{"id":5148,"date":"2011-04-13T00:00:00","date_gmt":"2011-04-13T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/04\/pump_dump_scam_alleged_in_600"},"modified":"2022-04-14T14:32:08","modified_gmt":"2022-04-14T19:32:08","slug":"pump-dump-scam-alleged-in-600","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/pump-dump-scam-alleged-in-600\/","title":{"rendered":"Pump & Dump Scam Alleged in $600 Million Lawsuit Against Law Firm Baker & McKenzie"},"content":{"rendered":"

Industrial Enterprises of America Inc. (IEAM) is accusing Baker & McKenzie, LLP and former partner Martin Weisberg of securities fraud<\/a>. The $600 million lawsuit, filed in US Bankruptcy Court, accuses the defendants of setting up a legal structure that allowed for an illegal pump-and-dump scheme<\/a> and causing the company to sustain $150 million in losses and investors to lose $450 million. Facing criminal fraud charges over the scam are Weisberg and ex-CEOs John D. Mazutto and James W. Margulies.<\/p>\n

Industrial Enterprises of America says that Weisberg was the one who helped set up its 2004 stock option plan, which provided for the issuance of restricted shares to employees, consultants, and outside directors. Rather than rewarding the Pittsburgh chemical company\u2019s employees, the strategy was to use \u201cprint money\u201d for company executives, their girlfriends, and lawyers.<\/p>\n

The plaintiff says that since Weisberg was the beneficiary of the sale of the stock, which was improperly issued, the law firm ignored what was going on while helping IEAM officials steal from the company. Industrial Enterprises of America also contends that there were false and misleading SEC and NASDAQ filings and internal corporate malfeasances were set up to \u201craid the company of its working capital.\u201d<\/p>\n

One year after Industrial Enterprises of America filed for bankruptcy in May 2009, Mazzuto was charged over the allegedly $60 million stock fraud scam. He is accused of issuing shares worth tens of millions of dollars to relatives, friends, and other people he personally knows, which fraudulently inflated the value of the stock.<\/p>\n

An indictment said that an attorney trust account that Margulies opened received the most company shares\u20143.5 million shares that he sold for $17.7 million. About $13 million went back to Industrial Enterprises of America. The remaining funds went to accounts that he and Mazzuto controlled.<\/p>\n

Industrial Enterprises of America says that Mazzuto personally made $15 million from the stock scam, Margulies gained $6 million, and Baker & McKenzie earned over $1.7 million in fees. The plaintiff wants restitution for the full value of the shares that were improperly issued, as well as compensation for unspecified damages.
\n
\nRelated Web Resources:<\/strong><\/p>\n

Baker & McKenzie Sued For $600 Mln Over ‘Pump And Dump’ Scheme<\/a>, Morningstar, December 4, 2011<\/p>\n

More Blog Posts: <\/strong>
\nFBI Arrests Texas Leader of Pump-and-Dump Scheme<\/a>, Texas Stockbroker Fraud Blog, March 23, 2011<\/p>\n

Ex-Gilford Securities Broker Indicted in International Stock Fraud Scam Involving Pump and Dump of Israeli and Chinese Securities<\/a>, Stockbroker Fraud Blog, February 19, 2011<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Industrial Enterprises of America Inc. (IEAM) is accusing Baker & McKenzie, LLP and former partner Martin Weisberg of securities fraud. The $600 million lawsuit, filed in US Bankruptcy Court, accuses the defendants of setting up a legal structure that allowed for an illegal pump-and-dump scheme and causing the company to sustain $150 million in losses […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3977],"tags":[],"class_list":["post-5148","post","type-post","status-publish","format-standard","hentry","category-pump-and-dump-scams"],"yoast_head":"\nPump & Dump Scam Alleged in $600 Million Lawsuit Against Law Firm Baker & McKenzie — Investor Lawyers Blog — April 13, 2011<\/title>\n<meta name=\"description\" content=\"Industrial Enterprises of America Inc. 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