According to a Businessweek report, three former executives of a now shut down Wall Street firm had been charged with frauding their investors of their money to save their brokerage operations. Former WJB Capital Group Chief Executive Officer Craig Rothfeld, former Chief Financial Officer Gregory Maleski and co-founder Michael Romano entered not guilty please to first-degree grand larceny and other fraud-related charges at the New York State Supreme Court. Should they get convicted of grand larceny, Businessweek said that the thee will be facing a jail sentence of up to 25 years.
US prosecutors have claimed that the three individuals have convinced at least 15 of its investors, which include their family members and friends, to invest more money into the firm and extend old loans. WJB Capital had shuttered its operations due to slower trading, capital shortage and high interest rates on some of their debts in Janaury 2012. Businessweek added that some of the interest rates of WJB Capital were as high as 25%.
In a statement, Manhattan District Attorney Cyrus Vance said, "Another investment fraud has come to light -- this time forcing more than 100 employees out of work. Manhattan is the center of the securities industry and my office will continue to aggressively prosecute those who steal from innocent investors."
The new charges to the three former Wall Street executives were the fruit of the intensified efforts of the New York regulators and prosecutors in enforcement in the financial industry since the 2008 financial crisis, Businessweek said. Vance initiated a special bureau in 2010 to combat complex economic crimes.
Businessweek said that Rothfeld allegedly used investors' money to pay for mortgage and improvements on his home the Hamptons and on his Manhattan apartment, among others. Romano, on the other hand, was claimed to also have used investors' money to personal leisure like luxury cars, strip club trips and hotel and country club stays. Maleski and Rothfeld were charged of filing false reports and for bloating WBJ Capital's net capital position to the Financial Industry Regulatory Authority, or Finra. The three also had been charged with other claims that underreported their earnings in the firm as well.
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