10 accused in scheme to cheat investors

Ten men, including a former Securities and Exchange Commission employee, were arrested Wednesday in a $12-million scheme to cheat investors using a Manhattan boiler-room operation with mob links, authorities said.

FBI agents raided an office building on West 36th Street, where the suspects duped investors with misleading sales pitches by phone, authorities said. One of the men under arrest was identified as a member of the Bonanno organized crime family.

Also charged was 63-year-old Steven Kimmel, the founder of a Florida company, Realcast, that authorities said was central to the scheme. Company literature "included the fact that (he) formerly was employed by the SEC," prosecutors said.

Prosecutors did not have the name of Kimmel's lawyer, and there was no response to a phone message left at his office in Miami. The SEC had no immediate comment.

An indictment filed in federal court in Manhattan alleges that in 2000, the suspects persuaded dozens of people to invest $12 million in Realcast, which offers Internet video services. They promised "to sell the shares directly to investors," saving them commission costs, the court papers say.

In reality, the brokerage was collecting 40 percent commissions, the papers say. In one instance, a suspect stole $50,000 that a victim believed was being put into the Florida company.

- AP