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NEW YORK ( TheStreet) -- Wall Street fraud, South American narcotics cartels, Silicon Valley-based online social networks, the poppy fields of war-torn Afghanistan -- the story behind a recent stock-fraud bust in New York involves just about every newsy flashpoint of the last decade.
Toss in a group of rough-and-tumble port workers, and it's as if life is imitating
The Wire -- transplanted from Baltimore to the Port of New York and New Jersey. The only difference between the real and fictional characters is that the former are connected -- electronically.
>>Avoiding Social Network Stock Scams
Details remain sparse, but it all started some years ago, when undercover agents at the Drug Enforcement Administration infiltrated a cocaine-smuggling ring at the busiest seaport on the East Coast. As the DEA pursued longshoremen with nicknames like Forty Dog and Boom and Greek and Chingy, its agents stumbled, really by accident, onto a racket of stock fraudsters -- separate from the stevedore coke traffickers, but with some overlap.
Just as one group of longshoremen allegedly got paid as much as 100 grand apiece to remove duffel bags of cocaine from containers lifted off of ships that had arrived from South and Central America -- all while avoiding the scrutiny of customs agents patrolling the docks -- other port workers were allegedly getting paid to bid on penny stocks and post fake recommendations on
Twitter as part of a classic pump-and-dump scheme -- all while evading the scrutiny of the
Securities and Exchange Commission.
At least that's what Preet Bharara, U.S. attorney for the Southern District of New York -- the office whose famed financial crimes unit has prosecuted just about every major Wall Street fraud case in the country's history -- alleged
in a complaint on Tuesday when the feds unveiled charges against 22 defendants.
Half of that number, most of them longshoremen, were involved in the cocaine probe, which also resulted in the seizure of 1.3 metric tons of the stuff, worth $34 million, according to the feds. The other half were part of the stock-fraud case, with only one longshoreman, named Juan Rodriguez, charged so far.
Indeed, the brains behind the stock-fraud operation were apparently located far from the New Jersey harbor front, in places like Boca Raton, Fla., a city with its own storied history of equities-related funny business. Similarly, the longshoremen who peeled packages of coke from the insides of containers were also merely cogs in a far larger organization, governed by a Panamanian drug ring, which allegedly moved cocaine in 100-kilogram batches, stashed in container ships passing through the Panama Canal.