A Rockland investment adviser has been suspended from selling securities for seven months for steering clients to a Hudson Valley tequila producer that went bust and whose founder has been sentenced to federal prison.
The Financial Industry Regulatory Authority also levied a $5,000 fine against Michael W. Mandel, of Suffern, and ordered him to disgorge $5,635 he received for introducing clients to the tequila company founder.
Mandel consented to the sanctions in February and FINRA, a private organization that regulates brokerage firms and investment advisers, publicized the case its May disciplinary actions report.
From May 2014 to October 2016, Mandel invited clients to promotional events for 6 Degree Tequila in Warwick, Orange County, introduced them to founder Joseph Cimino and gave them promotional materials.
Mandel was paid $5,635 for the introductions and promised equity in the company.
His clients invested about $815,000.
But the sales pitch was fraudulent, according to criminal fraud charges filed last year against Cimino by the U.S. Attorney’s Office and a civil complaint filed by the U.S. Securities and Exchange Commission.
The promotional materials showed fabricated profits and named phony investors, according to court records, and Cimino used investment funds for personal expenses.
FINRA did not implicate Mandel in the securities fraud. His transgressions were not telling his employer about private securities transactions and steering at least seven brokerage customers to the tequila enterprise.
Mandel was employed by Royal Alliance Associates, Old Tappan, New Jersey, and later by LPL Financial, Upper Saddle River, New Jersey.
LPL fired Mandel in February and reported the violations to FINRA.
Cimino was arrested for securities fraud in February 2021 and pleaded not guilty. In the SEC civil case, he was accused of conning 24 investors out of $985,000.
He changed his criminal plea to guilty last November.
On May 18, U.S. District Judge Vincent L. Briccetti, in White Plains federal court, sentenced Cimino, 58, to 18 months in federal prison and three years of post-incarceration supervision, and ordered him to forfeit $159,258 traceable to the fraud and pay $615,000 to the known victims.
