Well, Stratton Oakmont hit today's news....
September 24, 1999
Stratton Oakmont Executives Admit Stock Manipulation
By EDWARD WYATT
EW YORK -- Two former principals of Stratton Oakmont Inc., a defunct Long Island brokerage firm, have admitted that they oversaw a vast seven-year scheme to manipulate the stocks of at least 34 companies, costing investors hundreds of millions of dollars, federal prosecutors said Thursday.
Jordan R. Belfort, 37, and Daniel M. Porush, 42, who served as chairman and president, respectively, of Stratton Oakmont, pleaded guilty to 10 counts of securities fraud and money laundering. The guilty pleas involved companies that Stratton Oakmont helped to raise money in public stock offerings from 1990 through 1997, the prosecutors said.
In most cases, the shares sold to the public by Stratton Oakmont are now worthless. The firm, which was based in Lake Success, N.Y., and labeled by one prosecutor as "the most infamous boiler-room brokerage firm in recent memory," was banned from the brokerage industry in 1996 and has since closed.
The guilty pleas, which were announced Thursday by Loretta E. Lynch, the U.S. attorney for the Eastern District of New York, and Mary Jo White, the U.S. attorney for the Southern District, had been held under seal for as long as nine months. During that time, Porush and Belfort cooperated with the authorities in their investigations of several other brokerage firms and individuals.
That cooperation could reduce the sentences faced by the two men, which could exceed 15 years in prison and fines of hundreds of thousands of dollars, said Joel M. Cohen, an assistant U.S. attorney in Brooklyn. Sentencing will be scheduled before Judge John Gleeson in the Eastern District.
As part of their guilty pleas, Belfort and Porush have forfeited property worth at least $16 million, which will be used to establish a fund to compensate defrauded Stratton Oakmont investors, Cohen said.
Charles Stillman, a lawyer representing Porush, said the guilty plea "is Dan's effort to close a chapter in his life." He declined further comment. Gregory O'Connell, who represented Belfort, declined to comment on the pleas.
A year ago, the two men were indicted and charged with orchestrating the manipulation from 1993 through 1995 of the shares of the Dollar Time Group and the Aquanatural Co., whose stock offerings were underwritten by Stratton Oakmont. They were also charged with laundering $5 million of the proceeds of those offerings.
The guilty pleas announced Thursday greatly expanded the scope of those indictments to include charges that the two men manipulated the stock prices of at least 34 companies Stratton Oakmont underwrote. These included such companies as Judicate Inc., Master Glazier's Karate International, M.H. Meyerson & Co. and Solomon-Page Group.
According to prosecutors, the manipulations followed a pattern in which the two men agreed to help a company raise money only if they were given control of a substantial amount of the company's stock. They would then sell the stock to Stratton, which in turn sold it at higher prices to Stratton's customers. Once the shares were in the individual investors' accounts, the prices usually collapsed, leaving the shareholders with nearly worthless investments.
"These guilty pleas represent the successful prosecutions of the two principal owners of perhaps the most infamous boiler-room brokerage firm in recent memory," Ms. Lynch said. "As recent prosecutions by this office and others have shown, the demise of Stratton in December 1996 unfortunately did not end the infiltration of our securities markets by its corrupt principals and brokers."
Cohen said Porush and Belfort had cooperated with prosecutors in several recent cases, including one that resulted in the indictment last month of four former Stratton brokers who are said to have used an Internet site and an e-mail operation to defraud investors.
In addition, the two men participated in the investigation of Duke & Co., a brokerage firm, now defunct, that was indicted in May, along with its chairman, Victor Wang, and 17 former employees. Wang founded Duke & Co. after working as a broker and executive at Stratton.
Porush also pleaded guilty to charges that he participated in a conspiracy to engage in insider trading in 1994 and 1995 in connection with the proposed acquisition by the ITT Corp. of Caesars World.
nytimes.com |
