Broker Chief Michael Morris Pleads Guilty in A.J. Discala Stock Manipulation Scheme

In a surprise turn of events the last co-conspirator in the A.J. Discala stock fraud case is changing his plea. Micheal T. Morris who owned and ran one of the New York broker dealers that helped the Discala crew execute pump and dumps schemes in multiple small cap stocks will be in Brooklyn federal court on September 6th to plead guilty. Morris was hit with a superseding indictment after the DiScala trial ended this spring with a jury finding DiScala guilty on multiple counts of securities fraud. On July 27 the EDNY DOJ added an obstruction of justice charge against Morris for lying to the Securities and Exchange Commission when they questioned him about Discala’s pump and dump trades at his brokerage firm Halcyon Cabot Partners. Lying to a federal agent carries a five year sentence. Morris is now facing a total of 10 felony counts ranging from wire fraud to securities fraud to conspiracy.

Morris and his wife Nancy are well known in their Long Island community and members of Pine Hollow Country Club. Nancy Morris signed off on putting their home at 12 Siverbirch Road Merrick, NY for collateral in November 2015 for her husband’s million dollar bail bond.

The original indictment accused Morris of not doing his job in supervising one of his bad actor brokers Craig Josphberg who was a lead player in helping Discala artificially support the price of the stocks he was manipulating and also has plead guilty to pushing main street clients into the bad stock to pump up the price. Morris has always claimed in his motions he didn’t know what Josphberg was doing. He said the same message to his pals at his Long Island Country Club. In fact Morris was also the only who got a separate trial so he wasn’t tried with AJ Discala and a lawyer charged in the scheme Kyleen Cane. It looked like for a while that the DOJ was going to settle with Morris and no jail time would be recommend after they lost their case against Attorney Cane this spring. But once this obstruction of justice charge against Morris came out the girls and guys at the Eastern District of New York were back on their war path.

One of the most telling parts of the case is outlined in the new Morris indictment that says:

On or about February 27, 2015, officers of the SEC took the sworn testimony of the defendant MICHAEL MORRIS in connection with the SEC’s continuing investigation into violations of securities laws and regulations with respect to CodeSmart. During that proceeding, MORRIS made false statements to the SEC in an effort to obstruct, influence and impede the SEC’s investigation. For example, MORRIS falsely stated that he purchased CodeSmart stock on August 21, 2013, solely because the stock looked like a good value, and denied that he had discussed said purchase with Abraxas J. Discala, when, in fact, MORRIS purchased CodeSmart stock at Discala’s request to help prevent the stock price from declining too severely upon Discala’s anticipated sale of CodeSmart shares from accounts Discala controlled.

Around the time Morris was arrested in late 2015 FINRA also brought down the hammer on Morris. They barred him and revoked his firms broker dealer license for taking a kickback in a private placement deal.

A total of ten men and women were arrested as part of the DiScala ring. Seven of them plead guilty as the case was preparing for trial. Discala, Cane, and Morris were the only ones to fight the DOJ since the arrest began in July 2014 and now we see the last hold out Morris has admitted defeat. DiScala was found guilty and Cane got off with a not guilty verdict. It’s unclear how many of the 10 counts Morris is pleading too. Additionally the DOJ hasn’t pushed for a sentencing date for Discala yet which is odd. That usually means they are trying to get him to give up more info on others or get others to give up more info on him to increase or decrease the amount of time they will request for prison.

Only one person who plead guilty a few years ago, Darren Goodrich, has been sentenced and he got a lot more prison time than I expected. On July 12 2018 United States District Judge Eric N. Vitaliano sentence Goodrich to 41 months’ imprisonment for one count of conspiracy to commit securities fraud for Goodrich’s participation in the manipulation of the price and trading volume of the stock of Cubed ($CRPT).

I was the only reporter to get an exclusive interview with Discala and see the evidence the DOJ had collected. I was also first to report at it was Microcap attorney Adam Gottbetter who first tipped the FBI on to what Discala was doing after he was pissed at Discala for kicking him out of a deal and firing him as his attorney. Gottbetter was also arrested for his own scheme in mircocap stocks and spent 18 months in jail.

The last leg of this saga will be to see how much Discala and the 7 others waiting sentencing get in jail time. For A.J. Discala I’d except that will be a long time.


Enter your email address to subscribe to and receive notifications of new articles by email.


  1. The bastard deserves every day, week, month, year, he gets. Leaving his family penniless and fatherless. Above the law he is not. Kingpin deal maker he is not.
    Failure he is. An embarrassment to himself and society. A message to all those who try shortcuts and Mis deeds.
    And to say it was all just a joke. You are the joke Aj. The final laugh is on you.
    And you brought down so many people with you. Destroying so many lives.
    Rot It will be a long time.

  2. How much financial penalty will each one pay

  3. Any update on A.J.’s sentence?

  4. AJ is a sociopath, and will destroy everything around him that does not fluff his ego and or line his pockets. He is a self serving thief and has destroyed lives within his path. Steals from friends, business partners and older investors and blows it at the CT casinos with his wife. Now him and his wife run some BS Marijuana APP. Beware! Pathetic excuse for a human. Hope he is not heard from for a long time.

  5. Any update on sentencing?

    • Teri Buhl says

      The EDNY is ridiculous no one is scheduled to be sentenced and it’s been a year since AJ’s trial.

  6. Has Shapiro been sentenced or is he turning to work with the feds?

  7. Do you think A.J. will avoid jail time because of the long delay in sentencing?

  8. Sally Shaw says

    Where’s AJ?

  9. sally shaw says

    HOw is it possible that you are convicted and others plead guilty and no one is sentenced? What does that mean?

    • = That the DOJ is using those sentenced to cooperate in other financial crime cases. Sentencing dates have been set for some of the defendants now in April and one for the broker Craig will happen at the end of January

      • says

        Additionally it means that you cooperate and plead guilty and you are sentenced after the non cooperators and the case is closed. This is so the prosecutors will tell the judge how beneficial of a witness you were or were not in order for you to achieve the agreed light sentence.

  10. The day of reckoning has finally come for AJ. Friday, we find out how much time he will do. Any bets?

  11. Good Afternoon, Was A.J. sentenced yet?

    • Teri Buhl says

      No it was delayed again. The DOJ is asking for 15 years and $16 million in restitution.

      • Why is sentencing taking so long? Four years, isn’t that an incredibly long time? Seems like he’s getting off with no jail time and no restitution owed. No justice for those he cheated. They are out of luck. Rigged.

        • AJ is being sentenced today. I agree it has taken too long to help investors who where cheated out of money by this group. A lot of the issues where around the amount of restitution which was appealed in the broker Darren Goodrich case. He won the appeal so the DOJ had to go back and argue how much the other guilty defendants have to pay. As far as Mr. Morris his delays this year have to do with lawyer conflicts and religious holiday scheduling.

  12. Have you ever seen it take so long to sentence someone?

    • No this was a first. I heard the probation officer say to Shannon Jones the AUSA on the case, “I can’t believe this day has finally come”. AUSA Jones shook her head and laughed

Share Your Voice

This site uses Akismet to reduce spam. Learn how your comment data is processed.