Re: 10/30/99 - Brutal killings raising fears in stock probe
Brutal killings raising fears in stock probe
10/30/99
By Steve Chambers, Ted Sherman and Bill Gannon
STAFF WRITER
Prosecutors investigating a $100 million stock scam fear for the lives of witnesses connected to the case following the murders this week of two Internet stock promoters who were allegedly serving as government informants.
Officials in the Manhattan District Attorney's Office said they are worried about the safety of 20 accomplices and witnesses connected with the investigation of A.S. Goldmen & Co., a Naples, Fla.-based brokerage which had offices in New Jersey, following the execution-style murders of Albert Alain Chalem and Maier Lehmann.
'We're obviously concerned about the safety of witnesses," Dan Castleman, chief of investigations for the Manhattan District Attorney's Office, told the Naples Daily News.
Although prosecutors have made no direct links between the Goldmen case and the murders of Chalem and Lehmann, their deaths and roles as informants in the increasingly violent world of penny stock fraud have alarmed state and federal investigators.
The bullet-riddled bodies of Chalem and Lehmann were found early Tuesday on the marble dining floor of a Colts Neck mansion where Chalem lived.
The case is being handled by the FBI and the Monmouth County Prosecutor's Office, which have not yet eliminated any motive -- including their roles as government informants -- or suspects, including organized crime or disgruntled clients.
Robert Honecker, second assistant Monmouth County prosecutor, said his office is looking closely at Chalem and Lehmann's business dealings. "But at this point to say it's strictly business-related would be premature. Certainly some aspects of the investigation indicate their financial dealings may have played a part," he said.
Chalem, 41, of Colts Neck, worked at Goldmen for more than a year beginning in 1995. He had recently begun helping government prosecutors uncover illicit dealings in the penny stock industry, unnamed sources told the Associated Press.
'Alain was a government informant," said the acquaintance, who spoke to the wire service on the condition that he not be identified. "They (the government) can deny it all they want, but he was."
His friend and business partner, Lehmann, 37, of Woodmere, N.Y., was well-known to securities regulators and recently agreed to accept a $630,000 fine for his role in a $10 million penny-stock fraud investigation brought by the Securities Exchange Commission -- a case that has since spawned a parallel investigation.
Following his indictment in 1992 for a $1 million insurance fraud, Lehmann cooperated with federal authorities, his lawyer, Richard Horowitz, said. Horowitz added that Lehmann was so helpful that the assistant U.S. attorney prosecuting the case wrote a letter to the sentencing judge "extolling his cooperation."
A few years later, Lehmann approached state, federal and industry securities regulators about serving as an informant, according to a state official who asked not to be identified. But Horowitz said he was unaware if Lehmann acted as an informant in any other cases.
Chalem and Lehmann's latest venture was to promote certain stocks on their Web site, an Internet newsletter called StockInvestor.com.
Registered in Panama City and operated by an administrator in Budapest, the site touted small, micro- cap or penny stocks to subscribers. Such securities have been the focus of increasing attention by financial regulators because of the penchant for fraud.
The man who found the bodies of the two men early Tuesday, Allen Lloyd Conkling of Pequannock, is also known to federal securities regulators. A second man who found the bodies with Conkling has not been identified.
Conkling had been named, but not charged, in an SEC complaint with Lehmann. Conkling owns a tanning salon with Chalem in Fort Lee.
At the time of the murders, federal prosecutors were investigating a complex stock manipulation case in which Lehmann was intimately involved, officials said.
According to an SEC complaint filed last year, Lehmann made the introduction in July 1997 between a small group of investors and a company called WTS Transnational Corp., which was attempting to develop a fingerprint verification device for use with computers and ATMs.
WTS was later absorbed by a shell corporation traded publicly on the New York Stock Exchange that then changed its name to Electro- Optical Systems Corp., according to the complaint. Regulators said this allowed those charged to take the fingerprint venture public without serious scrutiny by regulators.
Lehmann and two dozen other defendants then conspired to manipulate the price of Electro-Optical stock -- taking such measures as issuing false press releases concerning the sale of a lone product that hadn't yet been developed and hyping the company on Internet stock sites, according to the complaint.
The complaint charges the group manipulated the price of stock so that it rose more than 1,000 percent in a single day, from about a quarter or 50 cents a share to more than $5 a share.
Although the civil charges were settled in that case, a related criminal probe had recently begun, authorities said.
County and federal investigators yesterday continued to sift through the pair's computer data, financial and telephone records to untangle the pair's murky business and personal dealings -- a world in which nothing was what it seemed.
Eulogizing Chalem at his funeral in Hackensack yesterday, Rabbi Andre Ungar recalled that Chalem played four years of football at the University of Miami in Florida.
'Another chance to prove his mettle, his manliness," added Pat Tarantino, one of his closest friends.
But officials at the University of Miami say no one by the name of Chalem ever attended the school.
'In the best sense of the word he was a character," Ungar said. "He loved a challenge, a dare, something to prove his mettle."
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