A federal jury in Brooklyn returned guilty verdicts against Pino
Baldassarre, the former president of Dolphin Digital Media, Inc. (“Dolphin”) and
Robert Mouallem, a stockbroker, on conspiracy, securities fraud, and commercial
bribery charges. These charges arose from the defendants’ scheme to sell their
shares of Dolphin at inflated prices by bribing stockbrokers. When sentenced by
United States District Judge Jack B. Weinstein, the defendants face a maximum
sentence of 25 years’ imprisonment on the most serious charge.
The verdicts were announced by Loretta E. Lynch, United States Attorney for
the Eastern District of New York, and Janice K. Fedarcyck, Assistant Director in
Charge, Federal Bureau of Investigation, New York Field Office.
According to the evidence at trial, Dolphin created secure social networking
websites for children. Its stock was publicly traded on the Over The Counter
Bulletin Board. In addition to serving as Dolphin’s President, Baldassarre was a
substantial shareholder of the company. Baldassarre was fired from Dolphin in
March 2009. Shortly thereafter, Baldassarre and another Dolphin shareholder met
with an individual, identified as “John Doe,” who claimed to have access to a
network of stockbrokers who managed client brokerage accounts and to have
authority to trade in those accounts on behalf of their clients. John Doe agreed
to have these stockbrokers purchase, through their clients’ accounts, Dolphin
shares owned by Baldassarre and the other shareholder in exchange for a kickback
of 30 percent of the sale proceeds. Baldassarre and the other shareholder
arranged for Mouallem to act as their stockbroker to sell their Dolphin shares.
Mouallem, who knew of the kickback arrangement, placed orders to sell the stock
in such a way as to ensure that John Doe’s network of stockbrokers bought the
conspirators’ Dolphin stock instead of other Dolphin stock that may have been
available for sale. Unbeknownst to Baldassarre, Mouallem, or the other Dolphin
shareholder, John Doe was a special agent of the Federal Bureau of Investigation
acting in an undercover capacity. In March and April 2010, Baldassarre,
Mouallem, and the other shareholder orchestrated five test sales of their
Dolphin stock, supposedly to John Doe’s network of stockbrokers. In each case,
Baldassarre paid the 30 percent kickback to John Doe.
“Rather than let the market set the true value of Dolphin stock, these
defendants engaged in a bribery scheme to manipulate the market for Dolphin
stock for corrupt personal gain,” stated United States Attorney Lynch. “It is
essential for the securities markets to be free of such corruption in order to
preserve investor confidence. Those who would engage in such manipulation
schemes should consider whether their ‘partners’ in crime are actually working
for the FBI.”
FBI Assistant Director in Charge Fedarcyk stated, “Schemes like this one not
only stack the deck unfairly for the schemers and undermine investor faith in
the integrity of the marketplace. If not for the presence of the FBI undercover
agent, this scheme would have resulted in real shareholders unknowingly paying
inflated prices for stock.”
The government’s case is being prosecuted by Assistant United States Attorney
Patrick Sinclair.
Today’s announcement is part of efforts underway by President Obama’s
Financial Fraud Enforcement Task Force (FFETF) which was created in November
2009 to wage an aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. With more than 20 federal agencies, 94 U.S.
Attorneys’ Offices, and state and local partners, it is the broadest coalition
of law enforcement, investigatory and regulatory agencies ever assembled to
combat fraud. Since its formation, the task force has made great strides in
facilitating increased investigation and prosecution of financial crimes;
enhancing coordination and cooperation among federal, state, and local
authorities; addressing discrimination in the lending and financial markets; and
conducting outreach to the public, victims, financial institutions, and other
organizations. Over the past three fiscal years, the Justice Department has
filed more than 10,000 financial fraud cases against nearly 15,000 defendants
including more than 2,700 mortgage fraud defendants. For more information on the
task force, visit www.stopfraud.gov.
The Defendants:
PINO BALDASSARRE
Age: 53
Residence: Indialantic, Florida
ROBERT MOUALLEM
Age: 57
Residence: Boca Raton, Florida
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