Usually, the stock exchange is not in the news unless there is some huge swing up or down, but recently, there has been a renewed interest in securities fraud thanks to the boom in so called, “MEME stocks.” And, perhaps, as a result of this new interest from the general public, the Securities and Exchange Commission has been announcing new charges, including the recent charges of former FTE Networks executives.
Readers may remember from the news at the time, FTE Networks was a telecommunications company that was delisted from the New York Stock Exchange last year. However, since that business model imploded last year, they are now in the business of leasing residential real estate.
In addition to several charges by local prosecutors, like the Manhattan District Attorney’s office, and private lawsuits Michael Palleschi, the ex-CEO, and David Lethem, the former chief financial officer, now face a civil complaint from the SEC. The SEC alleges securities fraud in a scheme to defraud investors in FTE Networks by hiding the company’s true financial condition between 2016 through 2019.
In addition, the SEC also claims that the men embezzled millions to pay for unauthorized personal-salary increases, private jets, luxury cars and stock issuances. The SEC further claims they improperly used funds to pay for their personal credit cards and unauthorized wire transfers to repay millions in third-party loans.
The results of the alleged crimes
The SEC claims this resulted in a net loss to the company of $92 million for 2017 alone. The claim is also that these losses dropped the price below levels that triggered debt repayment obligations that forced the company into bankruptcy.
After one is charged
After a Northport, New York, resident is accused of securities fraud, call an attorney immediately. All too often, regulators can over reach and over charge based on public opinion, so it is imperative to get an attorney involved as soon as humanly possible.