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Case Number: 1:15-cr-00171-ALC
Judge: Andrew L. Carter, Jr.
Court: United States District Court for the Southern District of New York (New York County)
Plaintiff's Attorney: Andrea M. Griswold, Rebecca Mermelstein, and Daniel Goldman
Marion Bachrach for Kenneth Wise
Matt Brissenden for Larry Lerbel
John Diaz for Walter Reissman
Lee Ginsberg for Edward Durante
Donna Newman for Larry Werbel
Description: New York, NY - Investment Adviser And Broker Found Guilty In Manhattan Federal Court Of Securities Fraud, Wire Fraud, Conspiracy And Aggravated Identity Theft Charges
CHRISTOPHER CERVINO, a/k/a “Smitty,” and SHEIK F. KHAN, a/k/a “Abida Khan,” were found guilty in Manhattan federal court after a three-week jury trial before U.S. District Judge Andrew L. Carter, Jr. for their roles in a securities fraud scheme involving a publicly traded over-the-counter company called VGTel, Inc. (“VGTL”).
Acting U.S. Attorney Joon H. Kim said: “... a unanimous jury found Sheik Khan, an investment adviser, and Christopher Cervino, a registered broker, guilty of securities fraud relating to a company called VGTel. The stock fraud scheme Khan and Cervino participated in defrauded 100 investors of more than $15 million, including nearly $5 million from Khan’s clients. For their roles in the scheme, Khan and Cervino now stand convicted of federal crimes.”
According to the Indictment, other filings in Manhattan federal court, and the evidence presented at trial:
The VGTL scheme was conceived and led by Edward Durante, a recidivist securities fraud defendant who pleaded guilty in August 2016 to various crimes related to VGTL, including conspiracy, securities fraud, money laundering and perjury. The defendants’ efforts to artificially inflate the market for VGTL increased the stock price from approximately $.25 per share in April 2012 to as much as $1.90, and dramatically inflated the trading volume, which increased the defendants’ abilities to raise private investments in VGTL. To compensate CERVINO for his efforts to control and manipulate the market in VGTL, Durante made at least two cash payments to CERVINO totaling $35,000, in addition to the substantial commissions Cervino received for executing trades in VGTL. For her part, KHAN received more than $400,000 from Durante, including more than $100,000 in payments for liquidating her clients’ investments in safe annuities so that the money could then be invested into VGTL. KHAN’s clients lost virtually the entirety of their investments in VGTL.
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CERVINO, 44, of Franklin Lakes, New Jersey, and KHAN, 50, of Las Vegas, Nevada, were each convicted of one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison. In addition to these charges, KHAN was also convicted of investment adviser fraud, which carries a maximum sentence of five years in prison, and aggravated identity theft crimes, which carries a mandatory sentence of two years in prison.
The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Kim praised the work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service, and thanked the Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force.
Outcome: See above.