Sky Capital Founder Ross Mandell Convicted in $140 Million Investment Fraud

by Wall Street Fraud on August 18, 2011

Investment fraud attorneyRoss Mandell, the former CEO of brokerage firm Sky Capital, LLC, and Adam Harrington, a senior broker at Sky Capital, were found guilty of conspiracy, securities fraud, wire fraud, and mail fraud for their involvement in a scheme that defrauded investors out of over $140 million.

Prosecutors accused self-proclaimed Wall Street “bad boy” Mandell of operating a boiler room scheme that involved soliciting investors, mainly in the United States and United Kingdom, through cold calls and high-pressure sales tactics.

As detailed by the FBI, the defendants also enforced a “no net sales” policy and instructed brokers not to accept Sky Capital sell orders unless a matching buy order could be generated from another Sky Capital customer, for the purpose of maintaining the market price of the Sky Capital stocks.

To accomplish this, brokers used high-pressure sales tactics and made materially false statements and omissions to induce investors to buy Sky Capital stock and to discourage them from selling. The defendants also made unauthorized purchases of Sky Capital stock in customer accounts as part of the no net sales policy.

According to court documents, the defendants used investor funds to pay excessive undisclosed commissions to brokers and to pay off victims who had lost money through prior purported investment opportunities.

In addition, the defendants used their ill-gotten gains to pay themselves excessive commissions and cover personal expenditures like private jets, luxury hotels, and expensive Swiss watches, Assistant U.S. Attorneys Pablo Quinones and Katherine Goldstein argued during the trial.

After the verdict was announced Manhattan U.S. Attorney Preet Bharara stated: “Ross Mandell and Adam Harrington were masters of deception who had no qualms about lying to investors, manipulating stock prices, and using dubious trading practices to enrich themselves at the expense of their victims. Today, a jury in Manhattan federal court saw through their elaborate scheme and recognized the defendants as the shameless fraudsters they truly are. They will now pay for their crimes.”

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

 

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