PENNY STOCKS AND THE MOB

Microcap fraud has long been a major source of income for organized crime. Mob figures from each of the Five Families of the New York mafia, as well as the New Jersey mob, have become involved in stock scams. The 2003 book "Born to Steal" by Gary Weiss focuses on Mafia infiltration of brokerages and provides a detailed description of the microcap fraud operation. Penny stock fraud was also explored in the books "License to Steal" and "The Scorpion and the Frog". Both anonymously written works explore pump and dump schemes, as does a book by Robert H. Tillman and Michael L. Indergaard, "Pump and Dump: The Rancid Rules of the New Economy".

A pump and dump scam was also the subject of several episodes of the popular HBO series, The Sopranos. One of the episodes of Law & Order, entitled "Trade This," portrayed the murder of a young stockbroker at a prestigious firm, which is later found to be related to his boss's involvement in several pump and dump scams financed by members of a Mafia crime family.

Securities and Exchange Commission is clearly dealing with this criminal trend. The SEC Testimony Concerning the Involvement of Organized Crime on Wall Street discussed their efforts to strike against organized crime on Wall Street. Over 100 individuals were indicted, including 11 members and associates of five different organized crime families (including the Bonanno crime family). The SEC reports that organized crime reportedly focused its efforts on the manipulation of microcap stocks. SEC, in close cooperation with the Justice Department, are implementing a vigilant program to safeguard the securities market from involvement by organized crime or recidivist fraudsters.