Wednesday, August 21, 2013

Marek Leszczynski, A Former Sales Broker Pleads Guilty in New York Federal Court in Connection with Securities Fraud Scheme

Marek Leszczynski, a former sales broker, pleaded guilty in New York federal court to conspiring with others to commit securities fraud and wire fraud, announced Preet Bharara, the U.S. Attorney for the Southern District of New York. Along with other individuals, Leszczynski defrauded clients of millions of dollars by misrepresenting the prices at which securities were bought and sold, thereby enabling his former employer to earn undisclosed trading profits and himself and his co-conspirators to be awarded lucrative bonuses. Leszczynski pleaded guilty before U.S. District Judge John F. Keenan this afternoon.

“Along with his cohorts, Marek Leszczynski sold his firm’s clients a bill of goods by repeatedly misrepresenting the prices of trade executions, all so he could increase firm profits and secure a hefty bonus,” said U.S. Attorney Bharara. “Ultimately, Leszczynski’s lies were exposed, and today’s conviction ensures he’ll be punished for his fraud.”

According to the complaint, the indictment, statements made during the plea proceeding, and other documents filed in Manhattan federal court:

From 2005 through December 2008, Leszczynski worked at a broker-dealer that was headquartered in London, England, with offices in Europe, Asia, and New York, New York (Broker-Dealer 1). Among other services offered, Broker-Dealer 1 bought and sold securities on behalf of institutional clients, such as commercial banks and investment firms, located throughout the United States and in various major European cities. Leszczynski worked as a sales broker for Broker-Dealer 1’s cash equity desk in New York. In that capacity, he was responsible for, among other things, receiving orders to buy or sell securities from Broker-Dealer 1’s clients, relaying those orders to traders who executed the trades, communicating with clients as their orders were being filled, and sending out trading confirmations back to the clients that showed the prices at which securities were bought or sold, including the commissions, if any, that Broker-Dealer 1 charged.

Instead of accurately recording and reporting the actual execution prices of the securities, Leszczynski and his co-conspirators, Chouchane and Condron, who worked alongside Leszczynski at Broker-Dealer 1, misrepresented the prices of trade executions. Where Broker-Dealer 1 received a buy order from a client, Leszczynski and his co-conspirators caused the purchase price of the security that would be reported back to the client to be “marked up” from its actual purchase price. Additionally, where Broker-Dealer 1 received a sell order from a client, Leszczynski and his co-conspirators caused the sale price of the security that would be reported back to the client to be “marked down” from its actual sale price. These markups and markdowns were not disclosed to Broker-Dealer 1’s clients and were separate and apart from the agreed-upon commissions that were disclosed on trading confirmations sent to Broker-Dealer 1’s clients.

As a result of this fraudulent scheme, Broker-Dealer 1 earned millions in undisclosed trading profits to which it was not entitled. Leszczynski and his co-conspirators were paid inflated bonuses.

Leszczynski, 44, of Miami, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud. He faces a maximum sentence of five years in prison, as well as a maximum fine of $250,000 or twice the gross gain or loss from the offense. In addition, Leszczynski has agreed to forfeit $1.5 million as part of his guilty plea. Leszczynski is scheduled to be sentenced before Judge Keenan on December 19, 2013.

Chouchane, 39, of New York City, pleaded guilty before Judge Keenan on June 12, 2013, to one count of conspiracy to commit securities and wire fraud. He is scheduled to be sentenced before Judge Keenan on October 24, 2013.

Condron, 34, of Yorktown Heights, New York, pleaded guilty before U.S. District Judge Naomi Reice Buchwald on October 5, 2012, to two counts of conspiracy to commit securities fraud and one count of securities fraud. Condron’s sentencing date is pending.

Mr. Bharara praised the investigative work of the FBI. He also thanked the U.S. Securities and Exchange Commission for their assistance.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Chi T. Steve Kwok is in charge of the prosecution.

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