The chief executive of business software services company Smart Online Inc (SOLN.OB), his brother and four brokers were arrested on Tuesday and charged with participating in a scheme to pump up the company's stock, prosecutors said.

Dennis Michael Nouri, the CEO, and his brother, Smart Online employee Reeza Eric Nouri, are accused of bribing brokers for several months in 2005 to sell the company's stock to their customers so the share price would rise, the U.S. Attorney's Office in Manhattan said.

Also arrested were brokers Ruben Serrano, Anthony Martin, James Doolan and Alain Lustig, prosecutors said.

Martin, Doolan and Serrano are all current or former brokers at Maxim Group LLC in New York, while Lustig is a broker at Jesup & Lamont Securities Corp, also in New York, according to a separate civil complaint against the six individuals and Smart Online brought by the U.S. Securities and Exchange Commission.

In court papers, prosecutors said the defendants wanted to boost the company's share price before it was listed on Nasdaq. In conversations recorded after the SEC suspended trading of the stock on Nasdaq, Dennis Nouri described how to lie to investigators to cover up the scheme, prosecutors contend.

The stock is traded on the OTC-Bulletin Board.

The names of the defendants' attorneys were not immediately available. A spokesman for the company, based in Research Triangle Park, North Carolina, was not immediately available.

Each defendant was charged with one count of conspiracy to commit securities fraud and one count of securities fraud, prosecutors said.

The conspiracy charge carries a maximum prison term of five years, and the securities fraud count carries a maximum sentence of 20 years.

The FBI and the SEC aided in the investigation, prosecutors said.