(CN) – Former senior brokers with Hampton Porter Investment Bankers won their bid for resentencing in the 9th Circuit, though the court upheld their convictions for inflating stock prices and lining their pockets.
Four senior brokers at the now-defunct Hampton Porter pleaded not guilty to a “pump-and-dump” scheme that led to a government indictment charging the brokers and the company’s owners and managers with securities fraud and conspiracy.
Hampton Porter went under in 2001 after the stock market fell sharply in 2000.
“The government’s investigation uncovered overwhelming evidence that the criminal conspiracy existed and that the owners and managers were complicit,” the ruling states.
In a plea agreement, the owners and managers agreed to testify that brokers Bryan Laurienti, Curtiss Parker, Donald Samaria and David Montesano had inflated house stock prices and given themselves bonus commissions.
The brokers were also accused of dissuading investors from selling their stocks. When investors did sell, the brokers would conduct secret transactions, shifting stock from one investor to another, to keep the total number of shares owned by Hampton Porter from dropping.
A jury found the brokers guilty on all counts and imposed sentences ranging from 30 months to 52 months in prison. They were also ordered to pay restitution ranging from $300,000 to $2.7 million.
The brokers challenged their convictions and sentences, arguing that their failure to disclose the bonus commissions is not a legal violation, especially not a criminal one. They claimed they were innocent brokers, “caught in the government’s overly wide criminal dragnet,” according to the ruling.
A three-judge panel in Pasadena upheld the convictions, but vacated the sentences. It ruled that the district court had miscalculated the loss investors suffered when calculating sentences and restitution.
“For any given victim, it is the net loss that matters; there is no basis for selectively offsetting gains for some house stocks but not others,” Judge Susan Graber wrote. “We hold that the district court’s calculation method erred in this regard.”
The court vacated the brokers’ sentences and remanded.