A Long Island attorney has been charged in Miami with conspiracy to sell unregistered securities in a scheme to fraudulently register shell companies with the U.S. Securities and Exchange Commission, issue shares in those companies, and then sell those shares to unsuspecting investors, federal prosecutors said.
In an announcement made this week, the Department of Justice said David Lubin, 52, of West Hempstead had been charged with one count of conspiracy to unlawfully sell unregistered securities — a charge that carries a maximum sentence of 5 years in prison and a fine of $250,000 or double the proceeds of the offense.
The case is assigned to U.S. District Court Judge Marcia G. Cooke in Miami and is being prosecuted by the U.S. attorney for the Southern District of Florida, authorities said.
Lubin is one of seven defendants charged in connection with the scheme, the DOJ said in a statement Wednesday.
The other six defendants, all of whom were previously convicted, are from Florida and California, the DOJ said.
According to court documents, Lubin “acted as a shell buyer, broker, and attorney for various shell companies” that, court records indicate, were created by four of the defendants between 2007 and 2014.
“In certain instances,” the DOJ said, “Lubin also provided false and fraudulent opinion letters to make it appear that shares that were actually controlled by the principals were not owned by ‘affiliates,’ and thus could be deemed unrestricted and available for sale to the investing public.”
The DOJ cited one fraudulent shell company, Entertainment Art Inc. — ticker sign EERT — and said Lubin “participated in the sale of that entity to a co-conspirator,” executing fraudulent documents “to make it appear that only restricted shares were sold” to that co-conspirator. Lubin drafted and filed documents with the SEC that “falsely represented the nature and control” of EERT shares, as well as terms of the sale, the DOJ said.
EERT later became a company called Biozoom Inc. — ticker sign BIZM — that the DOJ said was at the center of “a pump-and-dump manipulation scheme,” starting around October 2012.