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7 indicted in 'pump-and-dump' stock scheme, federal prosecutors say

Actress Jamie-Lynn DiScala poses with husband Abraxas

Actress Jamie-Lynn DiScala poses with husband Abraxas J. "AJ" Discala at the world premiere of "Call Me: The Rise and Fall of Heidi Fleiss," at the Pacific Design Centre on March 17, 2004 in West Hollywood, California. Credit: Getty / Frazer Harrison

Brooklyn federal prosecutors Thursday unsealed a $50 million stock manipulation indictment, charging six men and a woman in a "pump-and-dump" scheme with celebrity and political connections.

The lead defendant, self-styled financial adviser Abraxas J. Discala, 43, of Norwalk, Connecticut, is identified in news reports as the ex-husband of Jamie-Lynn Sigler, who played Tony Soprano's daughter on HBO's "The Sopranos."

CodeSmart, a medical coding company whose stock was allegedly controlled and manipulated by Discala, recently announced that former New York Gov. David A. Paterson joined its advisory board. Prosecutors said Paterson had no connection to the scam.

The indictment said the defendants used coordinated stock purchases, misleading official filings and hyped news releases to artificially inflate the price of cheap, thinly traded "penny stocks" such as Code-Smart, and reaped more than $50 million in profits at the expense of unwary investors.

CodeSmart, prosecutors said, had its price pushed up to a market capitalization of $86.3 million and was selling for $6.34 a share in July 2013, but it had only $6,000 in assets and $7,600 in revenue. By July 9, 2014, its price had collapsed to 1 cent a share.

In addition to Discala, the indictment named CodeSmart CEO Ira Shapiro, of upstate Congers, as well as two investors, two stockbrokers who allegedly sold inflated stocks into client accounts, and a lawyer.

The indictment alleged that in addition to CodeSmart, the seven tried to manipulate the stock of Star Stream Entertainment Inc., a movie company; The Staffing Group Ltd., an employment agency; and Cubed Inc., which claimed to be marketing a mobile phone app.

Prosecutors said they broke up the scam before stock in those companies could be dumped on unsuspecting investors. Altogether, the defendants allegedly inflated the price of the companies by $300 million.

Joseph Tacopina, Discala's lawyer, said he would "vigorously defend" the charges. A lawyer for Shapiro did not return a call for comment.The defendants are charged with conspiracy, securities fraud and wire fraud. They were all in custody, officials said, with court appearances scheduled Thursday in Brooklyn, and in Texas and Las Vegas.

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