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Financial Crimes
09/10/2010

Florida man sentenced in Delaware to 3 years and forfeiture of $1.49 million dollars

WILMINGTON, Del. - Gerard D'Amaro, 39, of Lighthouse Point, Fla., was sentenced on September 8 to a term of three years in federal prison, and further ordered to forfeit $1,490,610 to the United States for his role in a securities fraud and money laundering scheme.

The charges were part of a two-year securities fraud investigation into the manipulation of so-called "penny stocks" traded through the over-the-counter stock markets. The fraud scheme described in the indictment involved efforts to manipulate the prices of publicly traded stocks to create the illusion of market interest in those securities. The goal was to induce the investing public to purchase a stock based on the artificial trading volume, and thus increase the price of the stock. The defendant and his co-conspirators then were able to sell off significant holdings in these stocks, generating millions of dollars in proceeds.

In D'Amaro's case, the securities involved included Playstar Corporation (stock ticker: PLYCF) and INCA Designs, Inc. (stock ticker: IDGI). According to documents filed in court, the fraud scheme involving PLYCF alone generated in excess of $1.3 million in illicit gains. 

"People have attempted to manipulate and exploit financial systems since society created them, said John P. Kelleghan, special agent in charge of the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI) in Philadelphia. One of ICE's priorities is to work with our law enforcement partners to protect the public and the integrity of our nation's financial system."

"As I stated when this case was indicted, the integrity of our nation's public stock markets requires protection from those greedy few who engage in market manipulation at the expense of many," said David C. Weiss, U.S. Attorney for the District of Delaware. "Especially in these challenging economic times, the U.S. Attorney's Office is committed to vigorously prosecuting those who continue to undermine our system of capital markets by committing securities fraud. This sentence should demonstrate the serious consequences facing those who commit financial frauds in this District."

The investigation, which began in 2007, has been pursued jointly by local agents with ICE HSI; the Internal Revenue Service (IRS), Criminal Investigation; and the Delaware State Police; with assistance from local and federal investigators in Orange County, Calif., Ft. Lauderdale, Fla., and New York City. A separate civil action has been brought by the Securities and Exchange Commission. The federal charges against D'Amaro and others were unsealed in May 2009.

The case was prosecuted by AUSA Keith M. Rosen, Chief of the U.S. Attorney's Office Criminal Division, and AUSA Shannon T. Hanson.