Brokers must pay clients $845,000 arbitration award

Two were involved in defrauding 100 investors out of $15 million in penny stock fraud case.

Two former brokers involved in a stock fraud scheme have been ordered by a Finra arbitration panel to pay $845,000 to two clients they defrauded.

Christopher Cervino and Larry Werbel were involved in a scheme to inflate the market for the shares VGTel, Inc., a penny stock company. The scheme defrauded 100 investors of more than $15 million.

Last year, Mr. Cervino was found guilty of securities fraud by a federal court in New York, and last month was sentenced to one year and one day in prison. Mr. Werbel has pleaded guilty to fraud charges and awaits sentencing.

The Financial Industry Regulatory Authority panel ordered the pair to pay James Mirgliotta and the estate of his late wife, Bette, $595,000 in compensatory damages and $250,000 in punitive damages. Those damage amounts may be difficult to collect in light of Mr. Cervino’s prison sentence and a press story that appeared in September in which Mr. Werbel claimed that he became unemployed and lost his home since his arrest and was working as an Uber driver.