A Deer Park man pleaded guilty Thursday to scamming brokerage firms out of hundreds of thousands of dollars by using bad checks to buy short-term securities, federal prosecutors said.
According to the indictment, Mohammed and others opened brokerage accounts at E-Trade and Banc of America Investment Services in his name, as well as in the name of family members and others from April to September 2007.
Prosecutors would not comment on whether the others mentioned - but not named - in the indictment face charges. Loretta Lynch, U.S. attorney for the Eastern District of New York, said in a statement that the investigation is continuing.
Mohammed and others deposited bad checks ranging from $30,000 to $190,000 in the brokerage accounts and then bought short-term stock-option contracts that expired within a day, before the checks could bounce, according to the indictment.
If the contracts rose in value, Mohammed and others deposited enough funds to cover the purchase price, sold the contracts and cashed out.
But if the contracts decreased, they did nothing, leaving E-Trade and Banc of America with losses that ultimately added up to more than $600,000, according to the indictment.
The government said it intends to seek restitution from Mohammed.
His attorney, Gerald Hertz of Jackson Heights, did not respond to a request for comment.