Jailed Brokerage President Ran IPO Scheme From Cell, US Says
New York, Feb. 26 (Bloomberg) -- A brokerage president who served a grand larceny sentence has been charged with calling employees from prison and directing them to sell $8.5 million in phony initial public offering shares.
Ira A. Monas, 55, was behind bars in October 1999 when he began ordering workers to sell shares in United Parcel Service Inc., FreeMarkets Inc. and Fogdog Inc., U.S. Attorney Mary Jo White charged in a complaint unsealed late Friday.
Monas ran Milan Capital Group Inc., an investment advisory service in Melville, New York, and was the secret owner of AC Financial Inc. in Palm Harbor, Florida, authorities said. Calling from his upstate New York prison, he directed AC Financial workers in Pittsburgh to sell the IPO shares, even though the offerings were oversubscribed, according to an FBI affidavit.
``Monas would then attempt to disguise the fact that he was calling from prison by stating that he was calling from a loud restaurant, or from Europe,'' the affidavit said.
About 200 investors transferred money to accounts controlled by Monas, and AC Financial sent them bogus statements reflecting their investments in the IPOs, court papers said.
The money went to pay Monas's business and personal debts and to buy his daughter a Mercedes Benz, prosecutors alleged.
At the time of the scheme, Monas was serving a two-year prison term at Adirondack Correctional Facility in Ray Brook, New York, on unrelated grand larceny and forgery charges.
Monas Rearrested
Monas was released from the state facility Feb. 15 and has been in federal custody since FBI agents arrested him that day. He appeared Friday before U.S. Magistrate James Francis, who set bail at $1 million secured by two properties and ordered Monas held under house arrest in Massapequa, New York.
Monas expects to post bail by Tuesday, said Steve Scaring, his lawyer. Scaring said he will investigate the allegations.
``On its face, the allegations really make little or no sense,'' Scaring said. ``We're going to try to get to the bottom of the circumstances that caused the government to have such a belief.''
The U.S. Securities and Exchange Commission filed a civil lawsuit in January 2000 that accused Monas of defrauding investors in the Fogdog, UPS, and FreeMarkets IPOs, as well as a fourth, for World Wrestling Federation Entertainment Inc.
SEC attorneys alleged that Monas defrauded investors in Pennsylvania, Ohio, Texas, and North Carolina.
In November, U.S. District Judge Denise Cote granted summary judgment for the SEC against Monas; Michael Lamhut, a licensed broker; and Jason Cope, who managed the Pittsburgh office of AC Financial. The judge ordered Monas, Lamhut, and Cope to disgorge their profits and barred the three men from the industry.
Cote has appointed Aaron Marcu as a receiver to recover assets from Milan. Marcu helped the U.S. Attorney's Office in its investigation.
Feb/26/2001 17:22 ET
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