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US: NY stockbrokers overcharged customers $18.7M

Associated Press Published: October 5, 2012

NEW YORK (AP) — Two former stockbrokers were each freed on $2 million bail Friday after their arrests on charges that they illegally overcharged customers $18.7 million by secretly keeping portions of profitable customer trades.

Marek Leszczynski, 43, of Miami and Benjamin Chouchane, 38, of Manhattan were freed after brief appearances before a magistrate judge in Manhattan. They were each charged with conspiracy to commit securities fraud and wire fraud along with a lone count of securities fraud. Federal prosecutors said they worked together as sales brokers at the same brokerage firm. One of their colleagues pleaded guilty to security fraud charges this week.

The men were accused of carrying out the fraud while working at Linkbrokers Derivatives Corp. from 2005 through November 2010. The government said the scheme ran from 2005 until December 2008, and caused them to earn millions of dollars in bonuses because they generated outsized profits for the firm.

"Having been handsomely rewarded for these extra 'trading profits,' the defendants now stand to be punished for them," said Mary Galligan, the FBI's acting assistant director-in-charge in Manhattan.

She said the men overstated to clients the price of securities they bought on their behalf and understated the price of securities they sold for them.

The charges carry a penalty of up to 25 years in prison.

Defense attorney Joseph Tacopina said Leszczynski was "astonished and shocked he was charged with a crime. He still doesn't know why."

Guy Oksenhendler, an attorney for Chouchane, declined to comment.

In a release, the Securities and Exchange Commission also announced civil charges against the men, saying their markups and markdowns of prices they reported to their customers ranged from a few dollars to $228,000 in more than 36,000 transactions over the four-year period. The SEC said some of the fees were more than 1,000 percent of what they were telling their customers they were being charged.

"These brokers stole millions of dollars by overcharging customers for trades involving stocks with high trading volumes and price volatility, which are characteristics they wrongly thought would conceal their illicit pricing scheme," said Robert Khuzami, director of the SEC's Division of Enforcement. "They underestimated the SEC's ability and resolve to pursue such illegal schemes."


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