Wayne Man Made Millions Off Stock Schemes: Feds

WAYNE, PA – A Wayne man with two previous securities-fraud related convictions on his criminal record is now facing more securities fraud allegations, according to federal authorities.

U.S. Attorney William M. McSwain said Friday that Howard M. Appel, 57, of Wayne, was charged with one count of conspiracy to commit securities fraud.

Appel, a former licensed stockbroker, is accused of secretly acquiring large blocks of stock in publicly traded companies – including Virtual Piggy Inc. and Red Mountain Resources Inc. – to manipulate the market in those stocks, authorities said.

As alleged, Appel acquired title to the shares in the names of nominees in order to hide his ownership block from investors and made between $3,000,000 and $4,000,000 from his scheme, according to federal officials.

Using nominee accounts was necessary because he previously lost his license and was barred by the Financial Industry Regulatory Authority (FINRA) from selling securities or associating with any member firm, authorities said.

According t0 officials, Appel and his co-schemers allegedly manipulated the stock price by taking actions that were hidden from investors and security regulators including: working as a paid "consultant" to recruit investors, raise capital, and get the companies running; engaging in coordinated buying and selling, which he closely monitored, to raise the share price; and preventing co-conspirators from selling their shares without his permission.

The information further alleges that Appel encouraged unwitting investors to buy large blocks of stock by touting the companies’ supposed impending success while, at the same time, selling off shares from his nominee accounts — sometimes to those same investors.

Appel also allegedly traded on inside information that he obtained as a result of his "consulting" work for the companies, including the status of the companies’ efforts to get listed on NASDAQ. As alleged, none of these facts was disclosed to the investing public in any of the public filings the company and Appel were required to make.

Appel faces a maximum sentence of five years’ incarceration, a three-year period of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greatest, and a $100 special assessment.

"As alleged, Appel orchestrated an end run around his FINRA bar by conspiring with others, at least one of whom was a licensed stockbroker, to use nominee accounts to manipulate the market and turn an illegal multi-million dollar profit," McSwain said. "Apparently undeterred, this habitual fraudster once again used his market know-how to further his own self-interest and to violate the law. The efforts of our Office and the Securities and Exchange Commission’s New York Office demonstrate our steadfast commitment to using all of the tools at our disposal—both civil and criminal—to enforce the federal securities laws."

The criminal case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

The parallel civil enforcement proceeding was filed by the Securities and Exchange Commission’s New York Regional Office, under the direction of Mark P. Berger.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.

Image via Shutterstock