Off topic -- (WSJ) Alan Bond Is Sent to Jail for Fraud For 'Cherry-Picking' From Clients.
June 11, 2002
Alan Bond Is Sent to Jail for Fraud For 'Cherry-Picking' From Clients
By JERRY MARKON
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- Alan Bond, a once-prominent money manager and regular on TV's "Wall Street Week With
Louis Rukeyser," was convicted on charges of allocating winning trades to his own brokerage account and
saddling his clients with the losers.
A federal judge immediately threw Mr. Bond in jail, where he will await sentencing, set for Sept. 9. U.S.
District Judge Leonard Sand -- alluding to Mr. Bond's earlier indictment on charges of bilking customers out of
millions of dollars in a separate commission-kickback scheme -- angrily said: "The victims in this case were the
people who trusted Mr. Bond at a time when others were abandoning him."
Under federal sentencing guidelines, Mr. Bond, 40 years old, faces at least nine years
in prison, prosecutors said. He also faces another trial on the charges related to the
kickback scheme. Defense lawyers declined to comment on the verdict, but said Mr.
Bond plans to appeal.
Rising from a modest upbringing to attend Harvard Business School, Mr. Bond become
one of the first African-Americans to become famous in the prestigious world of
managing stocks. As the verdicts were read, he bowed his head and his father, James
Bond, sobbed: "I can't believe it. What did I do wrong?" Mr. Bond hugged his father
and other family members before federal marshals led him away.
The Bond matter was one of the more unusual Wall Street fraud cases in recent years.
While Mr. Bond is hardly the first money manager accused of defrauding clients, his
case stands out because at the time of his indictment in August 2001, he was out on
bail awaiting trial on the earlier set of fraud charges filed in 1999.
In rejecting pleas from defense lawyers that Mr. Bond remain free on $1 million bail, Judge Sand said: "The
defendant has reflected a great disdain for responsibility and a willingness to sacrifice the interests of those
who have shown confidence in him."
The charismatic Mr. Bond was able to remain in business between the two indictments by persuading a handful
of customers to stick with him. Three of those clients -- transit unions in Birmingham, Ala., and Richmond, Va.,
and a Baltimore-based pension fund -- became victims in the second scheme.
Jurors deliberated just 70 minutes Monday before convicting Mr. Bond on three counts of investment-advisory
fraud and three counts of mail fraud in the "cherry picking" scheme. Jury foreman Tony Impieri said jurors "all
pretty much agreed that the evidence was clear and the prosecutors did a good job."
The only defense witness during the three-week trial was Mr. Bond, who testified that the accounts of the
three victims lost more than $50 million because the stock market was plunging. His personal account at the
same brokerage firm, he said, rose more than $6 million because he employed a risky but profitable "day
trading" strategy.
It was that testimony, Mr. Impieri said, that persuaded him to vote for conviction. Initially, he said, he was
impressed by Mr. Bond's knowledge, saying his testimony sounded like a marketing pitch "as though we were
prospective clients." But as Mr. Bond got into the substance of the case and was questioned by prosecutors,
"he seemed like a shady character," Mr. Impieri said. "He wouldn't give a straight answer."
Prosecutors portrayed Mr. Bond as a poor money manager whose firm, Albriond Capital Management, lost
$600,000 in 2000. With customers fleeing and legal bills from the first indictment mounting, they said, Mr. Bond
needed money to keep paying $40,000 to $50,000 a month in personal expenses for him, his wife and their three
children.
"He acted in his interests, not in his clients' interests. He didn't just do it once, he did it hundreds of times,"
prosecutor Marc Mukasey said in closing arguments.
Unlike the Wall Street stars he rubbed elbows with on TV and in The Wall Street Journal's Investment Dartboard stock-picking competition, Mr.
Bond never earned more than $350,000 a year. But he spent lavishly, prosecutors say.
Indeed, Mr. Bond's spending habits also were crucial to the first and still-pending set of charges. In that case, Mr. Bond is charged with taking
$6.9 million in commission kickbacks from a broker to fund a lavish lifestyle that included owning 75 classic cars and American Express bills that
reached $476,000 one month.
Some of Mr. Bond's more prestigious clients, including the National Basketball Association players' pension fund and the City University of New
York, dropped him around the time of the first indictment. Prosecutors have indicated in court papers they intend to seek a plea agreement on the
first set of charges, but had no comment on that likelihood Monday.
Write to Jerry Markon at jerry.markon@wsj.com
Updated June 11, 2002
Copyright © 2002 Dow Jones & Company, Inc. All Rights Reserved |
