Italy Probes Mafia-Led Insider Trading in the U.S.
Feb. 9 (Bloomberg) -- Shares of Infinex Ventures Inc., a U.S.-based mining company, were manipulated by Italians working for an organized-crime family, netting them 15 million euros ($21 million), Milan’s
financial police said.
The stock was manipulated in U.S. trading from 2004 to 2008, according to an e-mail distributed today by the financial police, which conducted the investigation. The shares are also traded in Germany.
While none of the 18 Italians in the probe are facing charges for involvement in organized crime, the Infinex shareholders who benefitted from the fraud were members of the Canadian Mafia clan allegedly led by Vito Rizzuto, police said. The suspects were probed for conspiracy to manipulate the market and insider trading. Police said the case is related to a 2007 investigation in which two brothers were identified as suspected members of the Rizzuto clan.
Rizzuto, referred to by Canadian police as the “godfather” of the Montreal Mafia, is currently in prison in the U.S., and he may face extradition to Italy to face charges, the Milan financial police said.
Michael De Rosa, Infinex’s president and controlling shareholder, said his company has no connection to the Mafia, and he has paid a high price for agreeing to explore a property owned by the brothers.
‘I’m Not Mafia’
Now he has trouble attracting investors and board members to the company, he said in a telephone interview from Montreal. Two years ago, he answered questions by the British Columbia Securities Commission about his business dealings, De Rosa said.
“I’m not Mafia,” De Rosa said he told the commission. “If a rabbi sits down with the pope, does that make him Catholic?”
De Rosa isn’t under investigation, the financial police in Milan said.
Organized crime flourished during the economic crisis in Italy, according to a report published last month. The country’s main crime groups boosted profit by 12 percent to more than 78 billion euros from 2008 to 2009, according to Rome-based anti- racketeering group SOS Impresa’s annual report.
The Infinex case is an example of “Mafia infiltration of the real economy,” according to the police statement.
Infinex, based in Las Vegas, is a mineral exploration company. Infinex gave one of the brothers 100,000 shares in exchange for the rights to explore for gold on Texada Island, British Columbia, De Rosa said. No gold was found. The shares were last traded at less than one cent a share.
‘Pump-And-Dump’
The company warned shareholders with a release on PR Newswire on Jan. 9, 2006, of a “pump-and-dump” scam that would be of “no benefit to the company’s shareholders other than those unknown individuals attempting to make a personal gain.” False e-mails were being sent “in an attempt to increase the share value, which is totally unwarranted,” according to the release, which cited De Rosa.
A Milan brokerage, which wasn’t named, encouraged about 100 investors to buy the shares based on insider information or false news, police said. Unidentified shareholders would then sell when the stock rose, officials said.
In 2004, investigators revealed that Italian members of the Rizzuto crime family, which has been linked to drug trafficking to North America from South America, were seeking to invest in building a bridge linking Sicily to the Italian mainland. A separate 2007 probe uncovered people tied to the clan operating in Rome, Milan, Vicenza Verona, Bologna, Florence, Bari, Reggio Calabria, Catanzaro and Agrigento, according to a statement from that investigation.
In 2007, police uncovered a plan to launder $600 million in illegal proceeds and sequestered 150 million euros in assets in Italy associated with the crime syndicate.http://www.businessweek.com/news/2010-02-09/italy-prosecutors-probe-18-for-alleged-market-abuse-on-us-stock.html
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