A former brokerage executive was sentenced this week to eight years and four months in prison for his role in a stock manipulation scheme that authorities said netted millions in illegal profits.
Richard O. Bertoli, president of the now-defunct Executive Securities Corp., maintained his innocence, and asserted that no investors lost money. He said he plans to appeal his conviction on two counts of obstructing justice."The government certainly doesn't agree that nobody lost any money," said Assistant U.S. Attorney John M. Fietkiewicz, who prosecuted the case.
Bertoli, 61, of Rye, N.Y., was also ordered to pay a $7 million fine by U.S. District Judge Alfred J. Lechner Jr. The jury acquitted him of five charges, including a racketeering count, following 91/2 days of deliberations.
Bertoli and two others who pleaded guilty earlier were indicted in 1989 and prosecutors said they were the first defendants accused of penny stock fraud under the RICO (Racketeer Influenced and Corrupt Organization) Act. That act was originally intended as a legal weapon against mobsters.
One of the other defendants, Leo M. Eisenberg, was the government's chief witness. Eisenberg, formerly of Woodmere, L.I., pleaded guilty to obstructing justice in January 1992.
Richard S. Cannistraro, formerly of Venice, Calif., a former stock analyst with Wood Gundy Corp., pleaded guilty to a related 1987 nine-count conspiracy and stock fraud indictment that year. He was serving an 8-year term when he pleaded guilty to obstructing justice in a superseding indictment filed in 1989.
Executive Securities Corp. had offices in New York and Newark before it was liquidated by federal authorities in 1975.
The three men were accused of manipulating the prices of six companies upward, then taking $7.2 million in illegal profits, the government said.
Fietkiewicz said the evidence showed that $6.4 million in illegal profits were taken in a matter of weeks through the defendants' manipulation of three penny stocks of companies they controlled: Liquidation Control Inc. and Toxic Waste Containment Inc., both of Washington, D.C.; and High Technology Capital Corp., Paterson, N.J.