While Dioguardi's appeal in his bankruptcy fraud conviction was pending, he was indicted for securities fraud.Whitney, Craig R. "Jury Here Indicts 16 in Stock Fraud." New York Times. November 20, 1970. According to prosecutors, Dioguardi and Anthony Di Lorenzo, heir-apparent to the Genovese crime family, conspired to purchase 28,000 shares of Belmont Franchising Corporation, a substantially worthless over-the-counter stock.Hellerman, Michael and Renner, Thomas C. Wall Street Swindler: An Insider's Story of Mob Operators in the Stock Market. New York: Doubleday & Company, 1977. Whitney, Craig R. "Suspect in Securities Fraud Faces New Charges." New York Times. December 2, 1970; Kaplan, Morris. "Nine Are Indicted As Stock Riggers." New York Times. May 28, 1971. Dioguardi, Di Lorenzo and others opened accounts at numerous brokerages under false names, and purchased shares of Belmont from themselves and from each account in an attempt to inflate the price. They agreed to sell the stock to other investors, and then share the proceeds (estimated at $1 million) among themselves. Lucchese crime family member Michael Hellerman, who was part of the conspiracy, turned state's evidence and entered the federal witness protection program. At trial, Dioguardi was not only accused of running the stock fraud scheme but also of beating the original owner of the shares in order to get him to sell the securities to Dioguardi for just pennies.Kaufman, Michael T. "Fraud Case Opens in U.S. Court Here." New York Times. October 20, 1971; Kaufman, Michael T. "Beating Alleged in Swindle Trial." New York Times. October 21, 1971. Midway through the trial, a high-level aide to Senator Hiram Fong (R-Hawaii) pleaded guilty to charges he had attempted to quash the federal government's inquiry into the case.Lubasch, Arnold H. "2 Plead Guilty in Bribery Case Involving Aide of Senator Fong." New York Times. November 9, 1971; Lubasch, Arnold H. "F.B.I. Agent Says He Saw Bribery." New York Times. November 13, 1971; Lubasch, Arnold H. "Aide to Senator Fong Convicted Of Bribery Scheme and Perjury." New York Times. November 21, 1971. Dioguardi's defense attorney argued that Hellerman, the government's chief witness, could not be believed, and the jury agreed—finding Dioguardi not-guilty on July 12, 1972."Dio and 4 Others Acquitted of Fraud." New York Times. July 13, 1972.
