Six Indicted in Wall St. Stock Loan Probe

Widening probe allegedly involves finder fees and kickbacks at brokerage firms.

ByABC News
May 22, 2008, 1:54 PM

March 22, 2008— -- Six people four of them Wall Street figures, but also a secretary and a mail carrier are now caught up in a wider probe that involves an alleged system of finder fees and illegal kickbacks at several Wall Street brokerage firms.

The six were charged in three indictments unsealed today by the U.S. Attorney's Office for the Eastern District of New York.

One of the indictments alleges the secretary, Donna Macli, 45, and mail carrier, her husband Thomas Macli, 51, received phony finders fees from her brother, Andrew Caccioppoli, 47, a former manager of the stock loan desk at Janney Montgomery Scott LLC.

The three were charged with conspiracy to commit securities fraud and with mail fraud. The charges against Caccioppoli superseded those in an earlier indictment.

The second indictment charges Darin DeMizio, 42, a former supervisor at Morgan Stanley's securities lending desk, and Robert Johnson, 44, who represented Tyde Inc., with conspiracy to commit securities and wire fraud.

The third charges Joseph Lando, 35, another former manager of the stock loan desk at Janney, with the same offense, as well as conspiracy to commit commercial bribery in violation of the Travel Act.

The investigation focuses on the practices of brokerage firms that borrow and loan securities and use finding firms that locate the stock to be loaned.

Brokerage firms and investment banks use those practices to cover short sales of stock and as collateral on financial deals. The stock loan finders paid fees for facilitating the stock transactions.

The investigation has widened from initial charges last September that charged former Morgan Stanley and Janney employees including Caccioppoli in alleged stock loan schemes.

The investigation has focused on stock loan traders at large brokerage firms that devised fraudulent stock loan transactions, including transactions that involved shell companies allegedly established by one of the defendants' relatives.