Manhattan District Attorney Cyrus R. Vance, Jr., today announced the indictment of CRAIG A. ROTHFELD, 43, MICHAEL N. ROMANO, 41, and GREGORY S. MALESKI, 39, for their roles in a fraudulent scheme that they operated through WJB Capital Group, Inc. (“WJB”), a now-defunct Wall Street securities broker-dealer.
The defendants are accused of defrauding at least 15 investors out of more than $11 million. All defendants are charged with multiple counts of Grand Larceny in the First, Second, and Third Degrees; Violation of the Martin Act; and Scheme to Defraud. ROTHFELD and MALESKI are also charged with Falsifying Business Records in the First Degree for filing falsified reports with the Financial Industry Regulatory Authority (“FINRA”) related to WJB’s financial position. ROTHFELD and ROMANO are additionally charged with Offering a False Instrument for Filing in the First Degree, Criminal Tax Fraud in the Second Degree, and Criminal Tax Fraud in the Fifth Degree for filing false tax returns to evade New York State income taxes.[1]
“Another investment fraud has come to light – this time forcing more than 100 employees out of work,” said District Attorney Vance. “The charges against these defendants reflect the use of millions of dollars in stolen money to fund their extravagant homes, cars, and lifestyles. Manhattan is the center of the securities industry and my office will continue to aggressively prosecute those who steal from innocent investors.”
According to documents filed in court, ROTHFELD served as the Chief Executive Officer of WJB, ROMANO was its majority owner, and MALESKI was its Chief Financial Officer. Beginning in 2008, the defendants defrauded at least 15 investors of more than $11 million by convincing them to extend old loans and invest new money with WJB. They also sold fictitious receivables to one victim. The victims included close friends and family of ROTHFELD and ROMANO, as well as employees of WJB.
According to the charges, although the defendants told investors that their money would be used for legitimate company purposes, ROTHFELD and ROMANO withdrew significant funds from WJB’s bank accounts for their personal use. ROTHFELD used the money for payments and home improvements on his Manhattan co-op and Hamptons home, as well as private school tuition. ROMANO used the money for payments toward a home mortgage and luxury cars, as well as at nightclubs, hotels, and country clubs. Additionally, ROTHFELD and ROMANO used WJB’s corporate American Express cards for personal use, and then used money from WJB’s bank accounts – funded by investors – to pay those charges. In total, from at least 2008 through 2012, ROTHFELD and ROMANO and MALESKI are charged with taking at least $7.1 million from WJB.
As part of their fraud, ROTHFELD and MALESKI are also charged with filing false “Financial and Operational Combined Uniform Single” Reports (“FOCUS Reports”) with the Financial Industry Regulatory Authority (“FINRA”). These reports, maintained as part of WJB’s business records, contained substantial overstatements of WJB’s net capital position – a significant indicator of a company’s financial health – in order to stay in business while continuing to lure victims.
Additionally, ROTHFELD and ROMANO are each charged with filing false New York State personal income tax returns, thereby underreporting their respective incomes by hundreds of thousands of dollars.
On January 3, 2012, WJB terminated all of its employees, and by May 2012, the company had declared bankruptcy. In August 2012, FINRA expelled WJB for misstatements on the FOCUS reports and net capital violations. FINRA also barred ROTHFELD from the securities industry and barred MALESKI from managing or supervising employees of broker-dealer firms.
Assistant District Attorney Cory Jacobs led the investigation and is handling the prosecution of the case, under the supervision of Assistant District Attorney Judith Weinstock, Deputy Chief of the Major Economic Crimes Bureau, Assistant District Attorney Polly Greenberg, Chief of the Major Economic Crimes Bureau, and Executive Assistant District Attorney David M. Szuchman, Chief of the Investigation Division. Assistant District Attorney Vimi Bhatia, Deputy Chief of the Asset Forfeiture Unit, also assisted with the investigation.
Principal Financial Investigators John Thorpe and Biagio Rosano of the Forensic Accounting and Financial Investigations (“FAFI”) Bureau provided financial and investigative analysis, under the supervision of Irene Serrapica, Deputy Bureau Chief of FAFI, and Robert Demarest, Bureau Chief of FAFI. Major Economic Crimes Bureau Investigative Analyst Trevor Chenoweth provided financial and investigative analysis with the assistance of Trial Preparation Assistant Morris Breitbart. Investigator Gregory Dunlavey of the New York County District Attorney’s Office Investigation Bureau provided investigative support, along with Investigator Jonathan Reid under the supervision of Investigator Donato Siciliano, Supervising Rackets Investigator, Investigator Michael J. Wigdor, Deputy Chief of the Investigation Bureau, and Walter Alexander, Chief of the Investigation Bureau.
District Attorney Vance thanked FINRA for its cooperation and assistance with the investigation, as well as Tax Auditor Mukaila Raibu of the Criminal Investigations Division of the New York State Department of Taxation and Finance.
Defendant Information:
CRAIG A. ROTHFELD, D.O.B. 01/25/1971
New York, NY
Charges:
· Grand Larceny in the First Degree, a class B felony, 6 counts
· Grand Larceny in the Second Degree, a class C felony, 9 counts
· Grand Larceny in the Third Degree, a class D felony, 2 counts
· Securities Fraud, NYS Martin Act, a class E felony, 15 counts
· Securities Fraud, NYS Martin Act, a class E felony, 1 count
· Falsifying Business Records in the First Degree, a class E felony, 25 counts
· Scheme to Defraud in the First Degree, a class E felony, 1 count
· Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts
· Criminal Tax Fraud in the Second Degree, a class C felony, 2 counts
· Criminal Tax Fraud in the Fifth Degree, a class A misdemeanor, 1 count
MICHAEL N. ROMANO, D.O.B. 03/17/1972
Commack, NY
Charges:
· Grand Larceny in the First Degree, a class B felony, 6 counts
· Grand Larceny in the Second Degree, a class C felony, 9 counts
· Grand Larceny in the Third Degree, a class D felony, 2 counts
· Securities Fraud, NYS Martin Act, a class E felony, 15 counts
· Securities Fraud, NYS Martin Act, a class E felony, 1 count
· Scheme to Defraud in the First Degree, a class E felony, 1 count
· Offering a False Instrument for Filing in the First Degree, a class E felony, 3 counts
· Criminal Tax Fraud in the Second Degree, a class C felony, 2 counts
· Criminal Tax Fraud in the Fifth Degree, a class A misdemeanor, 1 count
GREGORY S. MALESKI, D.O.B. 05/21/1974
Massapequa, NY
Charges:
· Grand Larceny in the First Degree, a class B felony, 6 counts
· Grand Larceny in the Second Degree, a class C felony, 9 counts
· Grand Larceny in the Third Degree, a class D felony, 2 counts
· Securities Fraud, NYS Martin Act, a class E felony, 15 counts
· Securities Fraud, NYS Martin Act, a class E felony, 1 count
· Falsifying Business Records in the First Degree, a class E felony, 25 counts
· Scheme to Defraud in the First Degree, a class E felony, 1 count
[1] The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
