Members of the reputed Colombo and Luchese organized-crime families have been charged with manipulating the market for penny stocks as part of a broader racketeering case in Brooklyn, federal prosecutors said.

In an indictment unsealed yesterday, the U.S. Attorney’s Office in Brooklyn alleges at least six of 10 men the Federal Bureau of Investigation arrested yesterday on racketeering charges secretly controlled at least 15 branch offices of brokerage firms in the New York City boroughs of Brooklyn, Manhattan, and Staten Island.

Through those branches, prosecutors claim they ran a scheme to artificially inflate the price of penny stocks. Many of the branches were in the heart of Manhattan’s Financial District within blocks of the New York Stock Exchange.

Prosecutors described it as a classic “pump and dump” scheme, in which licensed and unlicensed brokers misrepresented the prospects of certain stocks to potential investors, in exchange for large commissions.

The defendants then sold their holdings in those stocks at inflated values, costing investors more than $20 million, the government said.

The 10 men arrested are: Joseph Baudanza, 61; Carmine Baudanza, 63; John Baudanza, 36; Jerry Degerolamo, 34; Arthur Gunning, 40; Craig Leszczak, 31; Craig Marino, 36; Robert Podlog, 32; Ronald Giallanzo, 35, and Vincent Rossetti, 40.

They are facing charges ranging from racketeering and extortion to conspiracy and securities fraud.

Lawyers for the men couldn’t immediately be reached for comment yesterday.

Prosecutors allege the prices of more than a dozen stocks were artificially manipulated as part of the scheme.

They included shares of Legends Sports, Axxess, HTTP Technology, Learner’s World, Rollerball International, SIMS Communications, Flexweight Corporation, Rick’s Cabaret International, Blini Hut, Orex Gold Mines Corporation, Motorsports USA, Evans Systems, Silver Star Foods, and America’s Hedge Fund.

Many of the stocks, which were allegedly referred to as “house stocks” by the defendants, were traded on the Over-the-Counter Bulletin Board or the NASDAQ small-cap stock market, the government said. They were mostly small companies, start-ups, or companies that did no business at all, according to the indictment.

Prosecutors said commissions of as much as 20% to 50% of the price of the house stock were paid to encourage brokers to tout them to the public. The brokers didn’t disclose these commissions to the public, instead telling investors they would receive a nominal commission or no commission would be charged, according to the indictment.