Agents arrested several people Wednesday at an office building on West 36th Street.
Authorities said the illicit brokerage was artificially inflating the value of a stock in a company with misleading sales pitches.
Ten defendants were arrested on Wednesday,one remains at large and two more are expected to surrender to authorities at a later date.
Among those under arrest are Steven Kimmel, a former Securities and Exchange Commission official, and Anthony Guarino, a reputed solider in the Bonanno crime family.
Investigators said Guarino ran the scam's daily "boiler room" style operation under the name Powercom Energy Services Corp out of the sixth floor of the Garment District building.
For nine years, they allegedly sold stock in two sham companies -- Realcast Live, based in Miami, Fla., and BBC Gaming Inc., based at 244 Fifth Avenue.
Realcast Live was run by Kimmel, according to investigators.
At the boiler room, salesmen placed cold calls to senior citizens, offering stock in the companies.
Investigators said salesmen collected 40% of the investment money as commission.
One investor lost his $50,000 life savings while another investor saw half of his $700,000 stock buy disappear as commission, authorities said.
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