Six Indicted In Alleged Wall Street Kick-back Scheme

May 23, 2008 1:20 p.m. EST

Brooklyn, NY (AHN) - Former traders on Wall Street are among six people who will be arraigned Friday on allegations they engaged in a kickback scheme involving securities lending.

Former Morgan Stanley supervisor Darin Demizio, former Janney stock-loan manager Joseph Lando and former Janney stock-loan manager Andrew Caccioppoli are scheduled to appear in Brooklyn federal court Friday. The three former Wall Street workers and one other person faces securities fraud, bribery and money laundering charges.

The charges stem from a practice of stock-lending, or securities firms lending to each other stock to cover short sales. The government said millions of dollars was funneled by the former brokerage workers for fraudulent finders-fees. Up to now, 18 other people have plead guilty to kickback and bribes surrounding stock-lending.

Demizio allegedly conspired with Robert Johnson of Tyde Inc, directing Morgan Stanley stock-loan business in exchange for kickbacks. Johnson also is charged with conspiracy to commit securities and wire fraud and money laundering conspiracy regarding alleged kickbacks he paid to a JPMorgan Chase trader, the government alleged.

Lando allegedly received kickbacks in exchange for giving Janney business.

Caccioppoli allegedly stole $350,000 to pay his sister and her husband for fake finders fees.

The former Wall Street workers face up to 25 years in prison for alleged conspiracy to commit securities fraud and up to 20 years for alleged money laundering.