BAR HARBOR — The owner of a local taxi company faces jail time for his alleged role in a $290-million “pump-and-dump” stock scheme.
Joseph Dervali, 54, of Bar Harbor and Pembroke Pines, Fla., was arrested by Officer Larry Fickett on Monday on an extraditable warrant out of New York State.
Dervali is the owner of Cadillac Joe’s Island Transportation, a taxi company offering transport to the airport, Acadia National Park tours, and other services here. He has been in business for two years, and this year is licensed for three vehicles.
Dervali was indicted in Manhattan Sept. 11 along with seven others for allegedly participating in stock market manipulation schemes which defrauded thousands of investors in penny stocks of approximately $290 million, according to Manhattan District Attorney Cyrus R. Vance.
“These individuals, as alleged in the indictment, are charged with using their position as stock promoters and company insiders to inflate their own profits through fraud and deceit, and at the expense of the investing public,” Vance said. “We will not allow this kind of manipulation to occur in our markets.”
Three men acting as principals in the scheme, which allegedly occurred between April 2009 and May 2012, are accused in the indictment of acting as a penny stock promotion team that conspired with individuals in control of public companies to “pump-and-dump” the companies’ stock. The promoters controlled numerous penny stock websites, Mr. Vance said, from which they promoted the sale of the stocks to thousands of investors.
At the same time, the alleged co-conspirators, including Dervali, acquired public shell companies with which to issue millions of free-trading shares to themselves, associates and family members, in order to control the supply of those shares and drive up the price of the stock. Potential investors were encouraged by the stock promoters to purchase shares in the companies, and as demand rose and the price went up, the defendants allegedly “dumped” their own shares, causing the stock price to plummet leaving investors with nearly worthless investments.
Dervali allegedly worked with several companies involved in the scheme, and was allegedly a member of the group that controlled the supply of those companies’ free-trading shares. Each defendant held significant blocks of free-trading shares, and all later liquidated the shares during the promotional campaign. The defendants allegedly held and sold other conspirators’ shares in order to conceal identities and skirt security regulations.
Dervali is charged with eight counts of scheming to defraud in the first degree and four counts of violating the Martin Act, both class E felonies. Each count is punishable in New York by up to four years imprisonment.
Police here were made aware of Mr. Dervali’s presence as a fugitive from justice by the New York State police before the arrest occurred Monday.
He was scheduled to come before a Hancock County judge on Wednesday for an extradition hearing.