Broker faces fraud charges for alleged kick-back scam
By Michael Kahn
SAN FRANCISCO (Reuters) - A former broker for UBS PaineWebber and Lehman Brothers was charged with securities fraud
Wednesday for an alleged scam that bilked clients out of hundreds of millions of dollars in exchange for lucrative kick-backs.
The Securities and Exchange Commission (SEC) said Enrique Perusquia, 48, faces both civil and criminal charges for allegedly forging client signatures, embezzling their money, destroying documents and sending phony statements in a scheme that ran from January 1992 through March 1998.
The SEC complaint focuses on just one client who lost at least $68 million but the alleged fraud is believed to have involved dozens of investors who lost hundreds of millions of dollars.
The charges come after a New York Stock Exchange arbitration panel late last year levied a whopping $429.5 million in damages and other fees against the broker after finding he defrauded clients.
"Everything a broker could do to cheat a client, he did," said Helane Morrison, the chief of the SEC's San Francisco District office.
Neither Perusquia, who lives in Jackson Hole, Wyoming, nor his attorney could be reached for comment.
According to the SEC complaint, Perusquia secretly invested client funds in a series of speculative gold-mining companies in return for kickbacks from the firms, which later collapsed. Perusquia also allegedly took $1.6 million of client money for personal use and forged power of attorney documents.
To cover up the fraud, Perusquia prepared and sent fake account statements to his clients, failed to disclose the extent of the gold mining investments and listed other securities the client did not own, the complaint alleges.
The SEC seeks unspecified civil penalties, a return of the illegal profits and an injunction from committing future violations of securities laws, while the criminal charges could bring 25 years in jail, a $250,000 fine plus restitution.
Ralph Midkiff, a Houston-based attorney representing 15 of the defrauded clients, said the scheme socked dozens of investors for losses that totaled hundreds of millions of dollars.
He added his law firm had already reached a confidential settlement with PaineWebber and Lehman Brothers and said Perusquia was found out after a suspicious client investigated what appeared to be an irregular statement.
"The entirety of the scheme is undoubtedly in the hundreds
of millions of dollars," Midkiff said. "We are certainly glad he is being brought to justice for this."
19:03 01-30-02 |
