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Stock Finder Garcia Indicted In Stock-Lending Probe
BY: Chad Bray
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(October 6, 2009 - Tuesday) - In a statement, the U.S. Attorney's office in Brooklyn, N.Y., said Ronald Garcia, of Independent Investor Services Inc., has been charged in a six-count indictment with conspiracy, securities fraud and four counts of wire fraud.
A lawyer for Garcia didn't immediately return a phone call seeking comment Monday.
Garcia, 62 years old, faces up to 25 years in prison on the securities fraud and conspiracy charges.
"The defendant allegedly entered into a fraudulent arrangement and paid kickbacks to corrupt traders at brokerage firms to buy their business," U.S. Attorney Benton J. Campbell said. "Such conduct undermines the public's confidence in the nation's securities markets and will be vigorously investigated and prosecuted."
Thirty individuals have either pleaded guilty or been convicted of criminal charges for allegedly funneling millions of dollars in sham finder's fees from brokerage firms in connection with stock-loan transactions - often where no legitimate services had been rendered.
Finders locate securities to loan to securities firms to briefly cover short sales and other transactions.
Prosecutors have alleged that Garcia failed to perform legitimate finder services in connection with stock-loan transactions between Van der Moolen Specialists USA LLC and Schonfeld Securities LLC between January 2004 and February 2005.
The government said Garcia, in exchange for fraudulent finder's fees, paid kickbacks to Kevin King, a then-Van der Moolen trader, who then shared a portion of the kickback with a trader at Schonfeld Securities. King pleaded guilty to a conspiracy charge in July.
Garcia was charged in a separate civil case brought by the U.S. Securities & Exchange Commission in U.S. District Court in Brooklyn last year. The criminal case is being handled by the U.S. Attorney's office in Brooklyn and the Federal Bureau of Investigation.
BY: Chad Bray
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