Dolphin Digital ex Baldassarre convicted in New York
2012-08-24 13:27 ET - Street Wire
by Mike Caswell A U.S. federal jury has convicted former Dolphin Digital Media Inc. president Giuseppe Pino Baldassarre of charges that stemmed from a broker bribery scheme. Mr. Baldassarre, a Canadian living in Florida, received the verdict on Monday, Aug. 20, after a three-day trial. He was immediately taken into custody to await his sentence.
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Prosecutors claimed that Mr. Baldassarre and an associate offered to pay a 30-per-cent kickback to have brokers buy $3-million worth of shares in Dolphin Digital Media, a Miami company that created secure social networking websites for children. (All figures are in U.S. dollars.) Unbeknownst to Mr. Baldassarre, the person who was arranging the buying was actually an undercover FBI agent. Also convicted on Monday was Robert Mouallem, a Florida broker who was to help sell the shares. The charges the jury convicted the men of are conspiracy, securities fraud and commercial bribery. They each face a maximum of 25 years in jail. The case remains outstanding against a third defendant, Prince Edward Island resident Malcolm Stockdale, 66. U.S. authorities have been unable to arrest him on the charges. A Sheriffs deputy sent to his last known residence in April, 2012, to serve him with a parallel civil suit reported that the home was no longer occupied. Broker bribery charges The allegations against the men are contained in both a criminal indictment and parallel civil fraud complaint that the U.S. Securities and Exchange Commission filed on Dec. 7, 2011. The scheme, as described by the SEC, began in October, 2009, when Mr. Baldassarre met with the undercover agent (who the complaint only referred to as "Individual A"). The agent told Mr. Baldassarre that he represented a group of brokers who would buy shares of Dolphin Digital in return for a 30-per-cent kickback. (At the time Mr. Baldassarre had been recently fired as Dolphin Digital's president.) According to the SEC, Mr. Baldassarre agreed to terms with the agent, and the men carried out a small test transaction in which the agent purportedly had brokers buy 100,000 shares. The test took place over several days in April, 2010, with the agent arranging for the purchase of $38,100 worth of stock. Shortly after that, Mr. Baldassarre deposited an $11,400 kickback into a bank account that the agent had designated, the SEC said. As part of their conversations with the agent, Mr. Baldassarre and Mr. Stockdale explained that they were looking for larger buys, the complaint stated. They told the agent they wanted to increase Dolphin Digital's price to at least 60 to 70 cents. (The stock was at 30 cents at the time.) They also said they wanted to liquidate their entire position of seven million shares, generating $3-million to $4-million, the SEC claimed. Mr. Mouallem, who worked at a Boca Raton branch of Garden State Securities Inc., was to help with the selling, timing sales to coincide with buying arranged by the agent. The SEC claimed that he expected a cash payment in return. During a Jan. 11 meeting he said: "Let me put it to you this way ... I meet Pino [Baldassarre] or you guys or somebody one day, and all of a sudden I find an envelope in my car ... if you so happen to lose money or something and I find it, ok." The SEC is seeking a permanent penny stock ban, disgorgement of ill-gotten gains and appropriate civil penalties. In the criminal case, the charges include seven counts of securities fraud, conspiracy to commit securities fraud and travel act violations. Mr. Stockdale and Mr. Baldassarre are among many Canadians to face broker bribery charges in the U.S. in recent years. The most recent was Vancouver's John Zanic, who served one year in a low-security jail in Minnesota after he and another man paid a $122,000 bribe to an undercover FBI agent. Others include Vancouver's Gary Burnie, who received six months of home detention in 2007. Mr. Baldassarre was born in Toronto and has spent at least some time in Vancouver. According to regulatory filings he previously served as the president of a Vancouver-based private entity called Pacific Entrance Systems. The court has not yet set a date for his sentencing.
