John D. Mazzuto, a corporate executive and James W. Margulies, an Ohio based corporate attorney, were arrested and charged with Grand Larceny, Scheme to Defraud, Conspiracy, Falsifying Business Records, and violations of the Martin Act for illegally issuing millions of shares of stock and attempting to steal more than $60 million to fund lavish lifestyles and pay for personal expenses.
Between 2004 and 2008, Mazzuto had allegedly schemed and acted as the CEO, President, Assistant Secretary and CFO of Industrial Enterprises of America, Inc., a public holding corporation in New York City to illegally obtain more than $15 million to pay for his personal expenses.
Codefendant Margulies also acted as the CEO and Board Member of Industrial Enterprises of America, Inc., and received more than $6 million of illegal proceeds from Mazzuto’s scheme.
Mazzuto’s purported plan began in 2002, when he merged a private company called EMC Packaging, Inc. with a shell company called Advanced Bio/Chem, Inc. and changed its name to Industrial Enterprises of America by 2005. With the help of Margulies, IEAM registered 15 million shares with the United States Securities and Exchange Commission and illegally issued the shares to other entities which sold them to inflate its stock price.
If convicted, both Mazzuto and Margulies face a maximum penalty of more than 100 years in prison for multiple counts of fraud.
