SOUTHERN DISTRJCT OF FLORIDA 18-20336-CR …combine, conspire, confederate, and agree with Ian C. Kass, Individual A, Steven Sanders, Daniel McKelvey,iAlvin S. Mirman, and others known

UNITED STATES DISTRICT COURT

SOUTHERN DISTRJCT OF FLORIDA

CASE NO.

18 U.S.C. j 371

18 U.S.C. j 981(a)(1)(C)

UM TED STATES OF AM ERICA

VS.

DELANEY EQUITY GROUP LLC,

Defendant.

/

INFORM ATION

The Attorney for the United States charges that:

Defendant DELANEY EQUITY GROUP LLC, was a Flodda limited liability

company based in Palm Beach Gardens, Florida, and was registered with the U .S. Secudties and

Exchange Com mission as a securities broker-dealer.

Individual A was the M ember M anager, President and Cllief Executive Officer of

DELANEY EQUITY GROUP LLC, and was a registered secudties representative.

Ian C. Kass was at relevant times employed by DELANEY EQUITY GROUP

LLC as a registered securities representative.

CONSPIM CY TO UNLAW FULLY SELL UNREGISTERED SECUW TIES

(18 U.S.C. 1 371)

From in or around October 2009, through in or around June 2013, in M iam i-Dade,

àroward, and Palm Beach Cotmties, in the Southern District of Florida, and elsewhere, the

defendant,


18-20336-CR-ALTONAGA/GOODMAN

Apr 26, 2018

TBCase 1:18-cr-20336-CMA Document 1 Entered on FLSD Docket 04/26/2018 Page 1 of 9

did willftzlly, thai is, with the intent to further the objects of the conspiracy, and knowingly

combine, conspire, confederate, and agree with Ian C. Kass, Individual A, Steven Sanders, Daniel

M cKelvey,iAlvin S. M irm an, and others known and unknown to the Attorney for the United States,

to commit certain offenses against the United States, that is: (a) to lcnowingly, willfully, and

Ilnlawftzlly, directly and indirectly, use any means and instruments of transportation and

commurlication in interstate commerce and the mails, to sell secudties, tllrough the use and

medillm of ény prospecms and otherwise; and (b) to knowingly, willfully, and tmlawfully carry

and cause to be carried tllrough the mails and in interstate comm erce, by any m eans and

instruments of transportation, securities, for the purpose of sale and for delivery after sale, in

violation of Title 15, United States Code, Sections 77e(a)(1), 77e(a)(2), and 77x, and Title 17,

Code of Federal Regtzlàtions, Section 230.144.

PURPOSE OF TH E CONSPIRACY

It was a purpose of the conspiracy for the conspirators to llnlawftzlly enrich

them selves by selling restricted shares of public companies using false and f'raudulent stàtem ents

in documents, to falsely indicate that the named shareholders were not affiliates of the companies.

These false and fraudqlent statem ents would allow the shares to be falsely classified as unrestricted

or free-trading ahd sold to the public at a profit.

M ANNER AND M EANS OF THE CONSPIM CY

The m anner and m eans by which the defendant and its conspirators sought to accomplish

the objects and purpose of the conspiracy included, among others, the following:

Steven Sanders, Daniel M cKelvey, and Alvin S. M irman would recnzit individuals

to serve as straw CEOs for certain issuers. The straw CEOs would have no further role with the

company and would be paid when the company w as later sold. Sanders, M cKelvey, and M irman

Case 1:18-cr-20336-CMA Document 1 Entered on FLSD Docket 04/26/2018 Page 2 of 9

would also recrtzit straw shareholders for the issuers and would assir a certain number of shares

to each straw shareholder. In reality, the straw shareholders were promised a fixed amount of

money once the company was ready to be sold, and the shares were in fact contzolled by Sanders,

M cKelvey, and M irman.

6. Steven Sanders, Daniel M cKelvey, and Alvin S. M irm an would then submit false

and fraudulent registration statem ents and other paperwork to the SEC. These registration

statements contained false business plans, falsely descdbed the role of the straw CEO, and

concealed the existence of Sanders, M cKelvey and M irman. These false and fraudulent

docum ents would be used to obtain effective registration of the shares of the companies.

DELANEY EQUITY GROUP LLC, lndividual A, and 1an C. Kass wouldprepare

Forms 211 on behalf of the issuers and submit them to the Financial Industry Regulatory Authority

(&TlNRA'') so that shares of the issuers could be quoted and traded over-the-cotmter. These

forms falsely and fraudulently represented thàt the comparties were executing their business plans

and were operating under the direction of the straw CEO. In re'ality, Individual A and Ian C. Itass

took a11 of their direction f'rom Steven Sanders, Daniel M cKelvey, and Alvin S. M irman, and came

to lenrn that the named oftk ers were m ere nominees. Individual A and Kass also leam ed that the

issuers were shell cpmpanies controlled by Sanders, M cKelvey, and M irman, and that FINRA

authorization for electronic trading was being sought so that these principals could sell the

ptlrported free-trading shares of the issuers to shell buyers.

8. In follow-up correspondence submitted by DELAM Y EQUITY GROUP LLC

.' to FINRA, that was transmitted via interstate wire comm unmication and the m ails, Individual A

and Ian C. Kass would provide additional false inform ation to perpetuate the fiction that the nam ed

officers controlled the companies, and provide false explanations as to the business plans of the


companies.

being transm itted with the authodzation of the nam ed officers.

Tllis correspondence also gave the false appearance that the communications were

Steven Sanders, Daniel M cKelvey, and Alvin S. M irm ail would open brokerage

accolmts at DELANEY EQIJITY GROUP LLC, and deposit shares into these accounts by

executing securities deposit forms that falsely and fraudulently represented that Sanders,

M cKelvey, and M irm an were not aftiliates of the entities. Individual A and Ian C. Kass would

approve and endorse these false and fraudulent deposit form s, representing that the inform ation

was true and correct, when i.n tnlth and in fact Individual A and Kass knew that Sanders, M cKelvey

and M irm an exercised control over the issuers. These fonus also falsely represented that the

representations ili these forms were 'Gtl'ue and correcty'' and that the securities deposited with

DELANEY EQUITY GROUP LLC were made in ç'compliance with a11 applicable federal and.1

state secutities laws and regulations.'' ,In one example, on or about August 31, 2010, for a

securities brokerage deposit form for M cKelvey's shares of M IB Digital, Inc., Individual A and

Kass signed the form as principal and representative, respectively, of DELANEY EQUITY

GROUP LLC, falsely representing that M cKelvey was not and had not been an affiliate of M IB

Digital, lnc.

10. Once FINRA authorization was approved for electronic trading and quotation of

the shares, DELANEY EQUITY GROUP LLC would become the exclusive market-maker for

the electronic trading of the issuer's stock for a period of tim e. Individual A and lan C. Kass

thereafter offered to sell and sold shares of the issuers that were held in the accounts of Steven

Sanders, Daniel M cKelvey, and Alvin S. M irm an, in the over-the-counter securities m arkets using

interstate wire comm unications, knowing that the shares had been deposited with DELANEY

EQUITY GROUP LLC using false statements in required papem ork, and that the shares should

have been classified as restdcted.


OVERT ACTS

ln furtherance of the conspiracy and to achieve the objects and purpose thereo: at least one

conspirator committed and caused to be committed, in the Southem District of Florida, and

elsewhere, at least one of the fbllowing overt acts, among others:

On or about December 2, 2011, Inclividual A and 1m1 C. Kass executed the sale of

14,000 shares of Rackwise, Inc., formerly known as MIB Digital, Inc., at a price of $1 .20 each, for

the benefit of Daniel McKelvey, involving shares that were deposited with DELANEY EQUITY

GROUP LLC using false and fraudulent pape- ork.

On or about December 2, 2011J, Individual A and Ian C. Kass executed the sale of

13,000 shares of Rackwise, Inc., fonnerly known as M IB Digital, Inc., at a price of $1.20 each, for

the benefit of Steven Sanders, involving shares that were deposited with DELANEY EQVITY

GROUP LLC using false and fraudulent papelw ork.

On or about December 2, 2011, Individual A and Ian C. Kass executed the sale of

14,000 shares of Rackwise, Inc., formerly known as M IB Digital, Inc., at a pdce of $1.20 each, for

the benefit of Alvin S. Mirman, involving shares that were deposited with DELANEY EQUITY

GROUP LLC using false and fraudulent papelw ork.

On or about Jtme 24, 2013, h dividual A executed the sale of 10,000 shares of Blue

S t a l'ice of $0.07 each, for the benetk of Steven Sanders, involving shares that wereun, a p

deposited with DELANEY EQUITY GROUP LLC using false and fraudulent papem ork

A11 in violation of Title 18, United States Code, Section 371.


FORFEITURE

(18 U.S.C. j 981(a)(1)(C))

The allegations of tllis lnform ation are realleged and by this reference fully

incop orated herein for the purpose of alleging forfeiture to the United States of certain property

in which the defendant has an interest.

Upon conviction of the violation alleged in this Information, the defendant shall

forfeit to the United States, any property, real or personal, which constitutes or is derived from

proceeds traceable to such violation.

A1l ptlrsuant to Title 18, United States Code, Section 981(a)(1)(C) and the procedures set

fol'th in Title 21, United States Code, Section 853, made applicable by Title 28, United States

Code, Section 2461.

ï A .NM NDY A

. HUM M EL

ATTORNEY FOR THE UNITED STATES,ACTING UNDER AUTHORITY

CONFERRED BY 28 U.S.C. j 515

JE DUFFY

A IS ANT UNITED STATES ATTORNEY


UNITED STATES DISTRIG COURTSOUTHERN DISTRICT OF FLORIDA

UNITED STATES OF AM ERICA

VS.


Defendant.

/

Court Division: (select one)

X Miami Key W estFTL W PB FTP

I do hereby certify that:

New Defendantts)Number of New DefendantsTotal number of counts

CASE NO.

CERTIFICATE OF TRIAL ATTORNEY*

Superseding Case Information:

Yes No

I have carefully considered the allegations of the indictment, the number of defendants, the number ofprobable witnesses and the Iegal complexities of the Indictment/lnformation attached hereto.

l am aware that the information supplied on this statement will be relied upon by the Judges of this Court insetting their calendars and scheduling criminal trials underthe mandate of the Spjedy Trial Act, Title 28 U.S.C.Section 3161.

Interpreter: (Yes or No) NOList Ianguage and/or dialect

This case will take 0 days for the parties to try.

Please check appropriate category and type of ofïense Iisted below:

(Check only one) (Check only one)

0 to 5 days6 to 10 daysllto 20 days21to 60 days61 days and over

X PettyMinorMisdem.Felony X

6. Has this case been previously filed in this District Coul't? (Yes or No) NoIf yes:Judge: Case No.

Has a complaint been filed in this matter? (Yes or No) NoIf yes:Magistrate Case No.Related M iscellaneous numbers:

Defendantts) in federal custody as ofDefendantts) in state custody as of .Rule 20 from the Dlstrlct o

Is this a potential death penalty case? (Yes or No) No

Does this case originate from a matter pending in the Northern Region of the U.S. Attorney's Office prior toOctober 14, 2003? Yes X No

8. Does this case originate from a matter pending in the Central Region of the U.S. Attorney's Office prior toSeptember 1, 2007? Yes X No

JERRO U ' YASSIST NT U ITED STATES AU ORNEYFlorid Bar. o. A5501106

*penalty Sheetts) attached R EV 4/8/08


UNITED STATES DISTRICT COURT

SOUTHERN DISTW CT OF FLORIDA

PENA LTY SHEET

Defendant's Name: DELANEY EOUITY GROUP LLC.

Case No:

Collnt #: 1

Conspiracv to Unlawftlllv Sell Unreaistered Seculities

Title 18. United States Code. Section 371

* M ax. Penalty: Five (5) years' probation

frRefers only to possible term of incarceration, does not include possible fines, restitutiom

special assessm entsr parole term s, or forfeitures that m ay be applicable.


AO 455 (Rev. 01/09) Waiver of an Indictment '

U NITED STATES D ISTRICT COURTfor the

Southern District of Florida

United States of America

V.

DELANEY EQUIW GROUP LLC.,

Case No.

De#ndant

W AW ER OF AN INDICTM ENT

1 understand that 1 have been accused of one or more offenses punishable by imprisonment for more than oneyear. l wms advised in open court of my rights and the nature of the proposed charges against me. '

$

After receiving this advice, 1 waive my right to prosecution by indictment and consent to prosecution byinfonnation.

De#ndant 's signature

é'fgntzfzlre ofdefendant 's attorney

Printed name ofdefendant 's attorney

Judge 's signature

.' Judge 'sprinted name and title


Documents

SOUTHERN DISTRJCT OF FLORIDA 18-20336-CR …combine, conspire, confederate, and agree with Ian C. Kass, Individual A, Steven Sanders, Daniel McKelvey,iAlvin S. Mirman, and others known