A former trader for ConvergEx Global Markets Limited (CGM Limited) — a former securities broker-dealer registered in Bermuda — has been charged in the District of New Jersey with conspiracy to commit wire fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department's Criminal Division, Assistant Director in Charge Valerie Parlave of the FBI's Washington Field Office and Inspector in Charge Philip R. Bartlett from the U.S. Postal Inspection Service (USPIS) made the announcement.
Craig Marshall, 47, of Bermuda, was charged under seal by criminal complaint on May 27, 2014, and he made his initial appearance this morning.
On Dec. 18, 2013, Jonathan Daspin, the head trader at CGM Limited, Thomas Lekargeren, a sales trader at a different ConvergEx subsidiary, and CGM Limited all pleaded guilty to conspiracy to commit securities and wire fraud before U.S. District Judge Jose Linares in the District of New Jersey. On the same day, CGM Limited's parent company, ConvergEx Group LLC, entered into a deferred prosecution agreement. Collectively, the two ConvergEx entities paid $43.8 million in criminal penalties and restitution.
According to the charges, certain ConvergEx Group broker-dealers regularly routed securities orders to CGM Limited in Bermuda so that it could take a mark-up (an additional amount paid for the purchase of a security) or mark-down (a reduction of the amount received for the sale of a security) when executing the orders. ConvergEx employees referred to such mark-ups and mark-downs as "spread," "trading profits," or "TP."
Also according to charges, to hide the fact that spread had been taken on trades, Marshall, Daspin, Lekargeren, and other employees at ConvergEx Group subsidiaries in Bermuda, New York and London created and sent false transaction reports to clients with fabricated details regarding the execution of orders, including the number of shares involved in a trade, the time at which a trade was executed and the price at which shares were either purchased or sold. After sending certain clients these false reports, the conspirators took a total of $5,171,394 in spread from them.
The charges allege that Marshall, along with Daspin and other conspirators, created and sent a false transaction report to a client on or around June 25, 2007, and created and sent an additional false transaction report to another client on Aug. 11, 2009.
The charges in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the FBI's Washington Field Office and the Washington, D.C., and New York offices of the U.S. Postal Inspection Service. The case is being prosecuted by Trial Attorneys Justin Goodyear, Jason Linder and Patrick Pericak of the Criminal Division's Fraud Section. Fraud Section Assistant Chief Robert Zink and former Trial Attorney Charles Reed also assisted with the investigation.
The department appreciates the assistance of the U.S. Securities and Exchange Commission and the United States Attorney's Office for the District of New Jersey.