MANHATTAN (CN) - Frank Zangara, who was permanently barred from brokering or dealing securities, worked with two other dealers with histories of sanctions to sell unregistered securities and take lucrative commissions from them, the SEC claims in Federal Court. The SEC also sued Zangara's company, B.H.I. Group; Corporate Communications Corp. and its CEO Christopher Castaldo; and Vision Securities and its de facto CEO Daniel James Gallagher.
Castaldo, 37, of Glen Head, N.Y., "was a registered representative of several broker-dealers that were the subject of civil and/or criminal actions based on their boiler-room activities, including Stratton Oakmont, Tasin, Foster Jeffries Co., Inc. and Duke and Co. Inc. Castaldo has been the subject of numerous customer complaints and at least three regulatory actions, pursuant to which he has been barred from working in the securities industry in New Mexico and Georgia and ordered to cease and desist from violating the securities laws in Kansas," the complaint states.
The SEC describes Gallagher, 43, of Roslyn, N.Y., as "the de facto president and an owner of Vision Securities. ... In 1998, the NASD censured and suspended Gallagher from association with any NASD member, in any capacity, for a six-month period based on alleged fraudulent conduct while he was at Stratton Oakmont. Gallagher was also named in at least eleven customer complaints and arbitrations. As a result of his disciplinary history and complaints against him, Gallagher has agreed with the NASD and several state securities regulatory authorities, including those of New York, New Jersey, Pennsylvania, Maryland, Florida and Connecticut, to restrict his trading activities and to be subject to heightened supervisory procedures." The NASD placed Gallagher's Vision Securities under a cease and desist order in February this year, "pursuant to which the firm can only take unsolicited orders."
Zangara, 46, of Locust Valley, N.Y., owns and controls BHI, "an unregistered entity. ... In 2004, the Commission obtained a permanent antifraud injunction against Zangara and an order barring him from associating with a broker-dealer based on his insider trading in securities mentioned in Business Week magazine. ... Zangara was the subject of prior disciplinary action by the New York Stock Exchange and the NASD and has not been a registered representative since 2000."
The SEC demands disgorgement, penalties and injunctions against this crew, and it would like Zangara to obey the previous permanent injunction against him, too.
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