BROOKLYN (CN) – The head of Schonfeld Securities’ stock loan trading desk defrauded the company of $1.7 million in sham finder’s fees and kickbacks, the SEC says in Federal Court. It sued Kenneth Suarez, three alleged co-conspirators and two corporations.
Suarez is accused of arranging stock loans that deliberately hurt Schonfeld in order to pay sham finder’s fees to Ronald Garcia and Gilbert Beital, who kicked back money to Suarez.
“Garcia paid kickbacks to (Kevin) King – a stock loan trader at Van der Moolen Specialists USA, LLC (VDM) who arranged the loans with Suarez and caused VDM to pay the sham finder fee to Garcia – and King then paid kickbacks to Suarez, while Beital paid kickbacks directly to Suarez,” the complaint states.
It continues: “The defendants sometimes took steps to conceal the kickback payments by, among other things, exchanging cash-filled envelopes at public restaurants, having the finder pay the trader’s credit card and mortgage bills, and making payments to a shell company.”
King is accused of causing VDM to pay Garcia’s firm, defendant Independent Investor, “approximately $200,000 in sham finder fees on over 2,000 stock loan transactions involving Schonfeld. Neither Garcia nor anyone else associated with Independent Investor performed any services in connection with those transactions.”
The other corporate defendant, Gilcar Securities of Florida, “Beital’s firm,” allegedly got $1.5 million in stock loan finder’s fees at Schonfeld’s expense.
Suarez, 57, lives in Staten Island.
King, 54, lives in Freehold, N.J.
Garcia, 61, lives in Hudson, N.Y.
Beital, 68, lives in Tampa. “He is currently self-employed as an ice cream vendor,” the complaint states.
Garcia runs Independent Investor and is its only officer, and Beital runs Gilcar, whose only officer is Beital’s wife, the complaint states.