Child Pornography Hid Behind XBox LIVE

November 4, 2011

According to federal prosecutors, John Kenneth Calderon Basto (a/k/a Tribal x MoDzz), 22, of Long Beach, CA played the popular video game Call of Duty: Modern Warfare 2 - such could be said of lots of young men these days. In pursuit of his online gaming, Basto had an Xbox LIVE gaming station, which allows gamers to engage in live online communication with other gamers.

Allegedly, Basto and an elementary schooler - a 10-year-old boy from Oklahoma - met online while they were both playing Call of Duty: Modern Warfare 2 on their Xbox LIVE gaming stations. The two gamers developed an online relationship and Basto invited the boy into a private chat room. During their private chat, Basto and the boy exchanged private cellphone numbers.

Subsequently, Basto made phone calls and sent text messages to the juvenile - and the adult gamer asked the child to send him pictures of his genitals. Basto offered the kid a deal: In exchange for the pictures, he would send the boy twenty cheat codes, which would allow the child to use elite weapons, obtain an unlimited number of game "lives," and other advantages that are normally earned through extended rounds of play.

Via text message, the boy sent the requested pictures from his cellphone to Basto. Apparently, having given this disgusting scheme some thought, Basto then told the boy to delete his text messages and pictures so he would not get caught. As luck would have it, the boy's mother discovered text messages from Basto on her son's cellphone and alerted authorities.

On November 3, 2011, Basto, who is presently in federal custody, pled guilty in federal court in the Western District of OK to causing the distribution of child pornography. At sentencing scheduled for February 2012, Basto faces not less than 5 years and up to 20 years in federal prison, lifetime supervised release, and sex offender registration.

This case was part of Department of Justice's Project Safe Childhood

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A personal message from Bill Singer:

It has been brought to my attention by a number of FINRA member firms that the Small Firm National Adjudicatory Council contested election has gone from the gutter, into the sewer, and now percolates in a cesspool. 

As you likely know, I was among the earliest proponents of contesting elections against NASD and then FINRA, I long counseled many dissidents on how to launch their campaigns, and I provided material support to further their efforts.

Unfortunately, as more folks sought to contest the same FINRA elected offices, more elbows started to swing and any common cause in furtherance of electing the most qualified candidate gave way to childish name-calling, and worse.  Having been on the receiving end of some of the most vile slander from cowardly anonymous authors, I abandoned the FINRA election scene.

In August 2011, FINRA's Nominating and Governance Committee nominated David M. Sobel for the Small Firm NAC seat.  I truly wish that David had declined that nomination and chosen to run as a petition candidate because I have little faith and confidence in the integrity of FINRA's in-house nominating process, which too often yielded hand-picked cronies.  Nonetheless, I reluctantly supported David's nomination because of his superb qualifications and my expectation that he will prove to be an outstanding, independent member of the NAC.

Subsequent to David's nomination, another individual chose to seek nomination as a contested candidate via the petition route.  I long respected that candidate's interest in industry reform.  If I had known of her interest in contesting the NAC nomination, I would not have published my August 5, 2011, support for David Sobel and would simply have opted to stay silent and on the sidelines.  The FINRA Small  Firm community would have been blessed with having a choice between two qualified and sincere candidates -- no one would have lost under those circumstances and this year's loser would likely have emerged as the favorite for the next open seat.

Although I have not personally met either of the candidates, I have maintained active email communications with them over the years, had numerous telephone conversations with each, and know them both to be sincere reformers who truly care about the causes that they advocate. 

Sadly, I learn that Sobel has become the victim of the most puerile and vicious attacks. The anticipated robust debate of a contested election has degenerated into little more than doing whatever it takes to get elected.  The rhetoric and the personal attacks against Sobel are all to reminiscent of the same language that was directed against me. 

Oddly, if the intent was to harm Sobel, the effort has misfired.  Not only have many voters been disgusted by the unnecessarily personal nature of the vitriol, but it has energized more support for Sobel than it's likely hope of generating support for his challenger.  In my case, it has forced my hand and motivated me to regrettably choose between two folks that I admired and respected.

Unequivocally, I urge all FINRA small firm members to vote for David Sobel for the NAC.  Not only will your vote elect a qualified candidate, but it will also send a much-needed and long overdue message that FINRA's Small Firm community is fed up with the counter-productive and unacceptable politics that has infected contested elections for too long. 

I re-post my original endorsement of David Sobel from August 5, 2011, below:


Bill Singer Supports the National Adjudicatory Committee Candidacy of David M. Sobel
Written: August 5, 2011

On August 5, 2011, the Financial Industry Regulatory Authority ("FINRA") announced the upcoming election for two open seats (one each for the Large Firm and the Small Firm members) on its National Adjudicatory Council ("NAC"), which comprises 14 members: 7 industry (two Small Firm, one Mid-Size Firm, two Large Firm, and two At-Large Industry Members); and 7 non-industry (at least three are Public Members). 

Service is typically for a three-year term. Those wishing to contest FINRA's Nominating and Governance Committee nominees will have 45-days to file the requisite petitions entitling them to be certified for the ballot.

The NAC is not an unimportant cog in the FINRA regulatory wheel -- to the contrary, it is among the most critical components. The NAC reviews all FINRA hearing panel decisions, statutory disqualification applications, and serves in the additional role as FINRA's appellate panel. 

Small Firm Nominee David M. Sobel

FINRA's Nominating and Governance Committee nominated David M. Sobel for the Small Firm NAC seat.

I have known David Sobel for many years as someone who is unequivocally committed to regulatory reform.  He is an industry veteran who's been there and done that -- he understands the pressures of your business and has the legal training to recognize the merits (or lack thereof) in the various FINRA matters that will be presented to him. Frankly, I can't think of many individuals that I have known after some three decades on the Street who are more qualified and suited for the position.

I urge you to cast your Small Firm vote for NAC candidate David M. Sobel.


Bill Singer

FINRA's Official Profile for David Sobel:

David M. Sobel, Esq. is currently executive vice president, general counsel and chief compliance officer of Abel/Noser Corp., a FINRA/NYSE member broker-dealer. He was previously a partner at The Goldstein Law Group, P.C., where he concentrated in the areas of broker-dealer compliance/regulation, securities litigation, including arbitration and mediation, and disciplinary/enforcement matters at the SEC, NYSE, AMEX and FINRA. Mr. Sobel was a floor member of the New York Stock Exchange from 1982 through 1991 as a floor broker for both H.A. Brandt & Co. and First Options of Chicago, and he was president of his own NYSE member firm, Ampro Securities, Inc. After leaving the NYSE floor, he was a senior equity trader/market maker for Trimark Securities.

Mr. Sobel has a Master of Science degree from Brooklyn College and a law degree from Pace Law School, where he was an editor of the International Law Review and recipient of the Dean's Award. He has served as a FINRA arbitrator, on FINRA's District 10 Committee and on FINRA's Small Firm Advisory Board. He has also served on the Board of Directors of the National Society of Compliance Professionals and as chairman of the board of the NAIBD. August 5, 2011

Mr. Sobel has been quoted in or interviewed by: Compliance Reporter,, Complinet, Trader's Magazine, Wall Street Letter, BD Week, Op/Risk and Compliance Magazine, Institutional Investor News and Dow Jones Newswire, and is a frequent speaker at securities conferences for SIFMA, NSCP, NRS, NAIBD, FMW and Strategy Institute. Recent conference topics include Managing Risk at Small BD; Internal Audits; Supervisory Responsibility, Financial Responsibility, Fraud Prevention in Portfolio Management, Social Networking, Foundations of Compliance, Best Practices and Forensic Compliance.

He is admitted to practice before the Supreme Courts of New York and Connecticut, the U.S. District Courts for the Southern and Eastern Districts of New York and the Second Circuit Court of Appeals. He is a member of the New York County Lawyers Association, the New York State Bar Association and the American Bar Association.