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Sky Capital Featured On CNBC's 'American Greed'

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This article is more than 8 years old.

One of the first trials I covered in New York was that of Sky Capital's Ross Mandell and Adam Harrington.  I spent the better part of July 2011 either in the courtroom or reading over court transcripts of the trial ... and boy was it entertaining/tragic.  Tonight (Friday, November 6) is the season finale of American Greed and it features the Sky Capital case in an episode entitled, "The Sky's The Limit."

Characters do not get any bigger than Ross Mandell.  People are polarized by the guy and either love him or hate him ... but there is no middle ground with Mandell.  He viewed his indictment, trial, conviction and prison term as wrongs that he tried to right.  In the end, he exhausted every legal means possible but is now serving 12 years in federal prison.  He entered prison in September 2014.

His biggest frustration was not being able to speak about the trial and his case but he tried to express himself in other ways by telling his life story and through motivational videos he put up on the Internet.  Whatever your opinion of Mandell, he is a fighter and ever the optimist.

I was interviewed by Kurtis Productions for my Forbes.com coverage of Sky Capital and will make an appearance in the show.  On the legal front, I always believed that Mandell had a good case about whether the government had jurisdiction to bring these charges.  His case involved the London Stock Exchange, mostly U.K. investors, investors who all signed off that they understood the risks, the companies were real and Sky managed to meet the rules of trading.  The legal ruling on which Mandell and Harrington based their defense was the Supreme Court's Morrison decision that held that U.S. securities laws did not apply to foreign exchanges ... which seems like common sense.  The government prosecutors had the position that the Supreme Court ruling was for civil, not criminal matters (Morrison was a civil case) and that there were a few U.S. solicitations for investment that allowed them to prosecute.  In the end, an appeals court and a rejection of Mandell's case by the Supreme Court meant that Mandell was heading to prison.

Mandell surrounded himself by a staff of ne'er-do-wells who cut every corner in the securities business.  He would encourage them to seek help for substance abuse, which was common among staff, and to enrich themselves through hard work ... selling stocks!  They partied hard, spent a lot of money, tried to make a success of the companies they funded and, in the end, lost a millions of dollars of shareholder money.

Those who cooperated against Mandell, and who admittedly lied to investors, all received probation for their roles in the Sky Capital prosecution.  U.S. District Judge Paul Crotty believed all the cooperators, no matter their previous records and criminal conduct at Sky, were manipulated by Mandell to commit fraud.  Mandell disputed that then and I'm sure he disputes it today ... but he is the one in prison.  Mandell, 58, has a release date of February 21, 2025 and is incarcerated at the Miami Federal Correctional Institute.

The lesson here is that there are no "sure thing" investments, particularly on thinly traded stocks.  Investors who count themselves as 'sophisticated' and put their money into these types of penny-stocks are gambling ... actually, gambling would be a better way to invest.

I will be watching tonight, as I'm sure Mandell will as well.