The allegations read: The securities and exchange commission ("commission"), for its complaint against defendants jonah engler a/k/a jonah engler-silberman ("engler"), joshua w. Turney ("turney"), hector perez a/k/a bruce johnson ("perez"), and barbara desiderio ("desiderio"), (collectively, "defendants"), alleges that defendants, through their commission-registered brokerage firm, conducted a fraudulent unauthorized trading scheme involving approximately 360 customer accounts during a period of more than two months, during a time when engler and desiderio suspected their firm would soon be forced to shut down. By making unauthorized trades in their customers' brokerage accounts, defendants generated over $2.4 million in unlawful markups, markdowns and commissions (collectively, "commissions") for their firm-resulting in significant pay-outs for each of them-while causing over $4 million in net losses for their defrauded customers.
in march 2015, engler and desiderio-who respectively controlled and served as a principal of global arena capital corporation ("global"), a then-registered broker-dealer- learned that the financial industry regulatory authority ("finra"), a self-regulatory organization, would not approve their application to transfer ownership of global to engler's holding company. Engler, based on increasing scrutiny from finra into global's sales practices, suspected he would soon be forced to close the firm. He decided to leave the securities business and close it down himself.
over the time remaining in which global had left to operate, approximately april 1 through june 4, 2015, engler directed turney and perez, registered representatives at global, to engage in unauthorized trading to generate commission revenue. Unauthorized trading means ordering trades for non-discretionary customer accounts, i.e., accounts that require trades to be pre-authorized by customers, but without obtaining any customer authorizations. At engler's direction and with desiderio's knowledge, turney and perez attempted to cover up their unauthorized trading by making fake calls to their customers that included, for example, leaving long voicemails with their customers or placing the call on mute if the customer answered the phone, in an attempt to falsely suggest that the customer had authorized the trading.
defendants also routinely used system codes of other registered representatives at global to obscure that turney and perez were the representatives responsible for these unauthorized trades-and in at least one instance, paid off a global registered representative with a share of commissions in exchange for looking the other way while they fraudulently used his code.
turney and perez, at engler's direction and with desiderio's knowing assistance, executed approximately 4,500 unauthorized trades in approximately 360 customer accounts. Of the $2.4 million in unlawful commissions generated from the unauthorized trading, engler and companies he controlled received approximately $1.1 million, turney received over $280,000, perez received over $135,000, and desiderio received over $390,000.
