US police bust largest stock market fraud

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Prosecutors in New York revealed last night that they had cracked the biggest securities fraud in United States history, ending a massive stock market scam controlled by the Mafia.

Prosecutors in New York revealed last night that they had cracked the biggest securities fraud in United States history, ending a massive stock market scam controlled by the Mafia.

No fewer than 120 defendants are cited in the case, most of whom had been rounded up and arrested by last night.

The defendants are accused of using a variety of means tomanipulate stock prices for enormous financial gain. Their tactics includedtraditional "boiler-room" techniques, in which stocks are punted at excessive values by telephone and financial websites.

The US attorney Mary Jo White told a crammed press conference in lower Manhattan: "We are announcing today the largest securities fraud take-down in history." The charges range from racketeering to using bribery, extortion and even solicitation to murder.

Never before in the United States has such a large number of individuals been taken into custody in a day for a financial crime - and rarely for any crime. While some are well-known Mafia associates, others had been seen as upstanding members of the community.

Those dragged from their homes and offices included members of the five New York crime "families", some 57 licensed and unlicensed stockbrokers and advisers, union officials, a hedge fund manager, a former New York detective and 30 officers of publicly traded companies whose shares were linked to the scams.

The investigation, according to the FBI assistant director Barry Mawn, had "uncovered once again La Cosa Nostra's efforts to infiltrate the securities markets".

The court documents accuse leading members of the Colombo and Bonanno crime families of recruiting help from the three remaining Mafia clans in New York, to run the stock schemes. They exerted control over scores of brokers in the financial district, forcing them to manipulate stock prices either by offering financial incentives or threatening them with violence or death. In some cases, the prosecutors said, the main players in the operation had control over entire departments in unsuspecting Wall Street firms.

Mr Mawn said: "No matter what market the mob tries to infiltrate, from the fish market to the stock market, the methods it uses are always the same; violence and the threat of violence." The prosecutors offer proof that as traditional areas of profit have been closed to it by tougher law enforcement, the Mafia has turned to Wall Street in search of new opportunities. The court papers said one of the scam's tactics was to lie to investors that certain stocks were in new dot.com firms when they were not. Mafia infiltration of the stock world has already caught the imagination of directors in the film Boiler Room and the television series The Sopranos.

The Mafia clans ran an outwardly respectable bank in lower Manhattan called the DMN Capital Investment Bank. Ms White said the activities of those accused had cost the scheme's victims around $50m.

Rudolph Giuliani, New York's mayor, promised yesterday to investigate claims that police officers stood by as several women were attacked in broad daylight in Central Park on Sunday evening, by assailants who ripped their clothes from them. Public shock over the attacks continued to grow yesterday. By last night, 24 women had filed complaints of assault.

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