Mark Allen Lefkowitz, 44 of Colts Neck was indicted in January after pleading guilty to securities fraud as a stock trader.
According to FBI reports, Lefkowitz exploited "a little-known provision that allows companies to issue unregistered shares of stock to settle 'bona fide' debts."
Lefkowitz pleaded guilty to creating fake loan agreements with corporations, some international with CEO Mark Anthony Lopez of mining company Unico, Inc.
An agreement was made between Lefkowitz and Lopez to default on the loans and enter into a lawsuit with each other, which would be settled with both parties' interests in mind.
"The terms of the written settlement agreement would be extremely favorable to Lefkowitz. In short, the CEO would agree to settle 'Company A’s' debt by issuing new, unregistered shares of stock worth as much as five times, or more, than the debt that 'Company A' actually owed," the report said.
Lefkowitz pleaded guilty to having side agreements with Lopez before the lawsuits were settled, while Lefkowitz remained a "corporate insider."
The Colts Neck stock trader faces up to 25 years in prison and a $250,000. Lefkowitz will also pay restitution to victims of the fraud in an amount to be later set.
Lopez was also indicted, according to Bloomberg Business Week.