Manhattan District Attorney Cyrus R. Vance, Jr., today announced the sentencing of MICHAEL KORDICH, 53, to 2 1⁄3 –to-7 years in state prison and full restitution for stealing hundreds of thousands of dollars from investors by engaging in a securities fraud scheme. In August, KORDICH pleaded guilty in New York State Supreme Court to all of the charges in the indictment against him, including two counts of Grand Larceny in the Second Degree, four counts of Grand Larceny in the Third Degree, six counts of violations of the Martin Act, and one count of Scheme to Defraud in the First Degree. In 2013, KORDICH was indicted with co-defendant SHMUEL SHNEIBALG, who absconded and has not yet been apprehended.
“Michael Kordich took advantage of registration exemptions to print worthless shares of stock and then sold them to investors, who were duped into thinking that they were supporting an eco-friendly product,” said District Attorney Vance. “In reality, the defendant used the money to pay household bills, restaurant tabs, purchase furniture, and make payments to a private boarding school.”
As KORDICH admitted as part of his guilty plea, between approximately June 2009 and November 2012, KORDICH obtained money from numerous investors by promising freely tradable stock in a public company called Safetek International, Inc. (“Safetek”). During this time, Safetek traded on the Over-the-Counter Pink Market under the ticker symbol “SFIN.” KORDICH acted as Safetek’s chief fundraiser, and was in charge of raising capital for the company.
In order to obtain freely tradable stock, KORDICH and his co-defendant abused Section 3(a)(10) of the Securities Act of 1933, which is meant to aid companies in financial distress by allowing the company to issue stock in exchange for existing debts. To qualify for this relief, defendants filed papers in court in Seminole County, Florida, containing false information.
The defendants told investors that their money would be used by Safetek to fund a start-up subsidiary company called Newave Packaging Inc., which would sell an environmentally friendly plastic wrap for the food industry. Under this scheme, KORDICH and his co-defendant defrauded investors out of more than $800,000. On top of taking money directly from those investors, KORDICH also profited from his fraudulent scheme by selling shares of Safetek in the open market. He did so while touting the company to victim-investors, most of whom were either unable to sell their stock, or had to sell their shares at a loss.
Former Assistant District Attorney Judith Weinstock and Assistant District Attorney Sarah Sacks prosecuted the case, under the supervision of Assistant District Attorney Polly Greenberg, Chief of the Major Economic Crimes Bureau, and Executive Assistant District Attorney David Szuchman, Chief of the Investigation Division. Investigator Gregory Dunlavey and Senior Investigator Behzad Ahdout assisted in the investigation, under the supervision of Supervising Investigator Donato Siciliano and Chief Investigator Walter Alexander. Trial Preparation Assistants Lucy Kissel and Charles Mace, as well as Financial Investigator Wei Man Tang, assisted in the investigation.
District Attorney Vance thanked the New York Regional Office of the SEC, the Saratoga County Sheriff’s Office, and the U.S. Marshals Florida Regional Fugitive Task Force for assisting in the investigation.
MICHAEL KORDICH, D.O.B. 12/19/1960
Boca Raton, Florida
- Grand Larceny in the Second Degree, a class C felony, 2 counts
- Grand Larceny in the Third Degree, a class D felony, 4 counts
- Violations of the Martin Act, a class E felony, 6 counts
- Scheme to Defraud in the First Degree, a class E felony, 1 count
- 2 1⁄3–to-7 years in state prison
- Approximately $804,000 in restitution