Meyers Pollock Stole $176 Mln, Prosecutors Allege New York, April 25 (Bloomberg) -- A defunct New York
brokerage and 20 others, including the firm's president, were
indicted today on charges of cheating thousands of investors out
of more than $176 million by selling stock in ``valueless''
companies, including one that owned three pizzerias in Poland.
Manhattan District Attorney Robert Morgenthau accused the
Meyers Pollock Robbins Inc. securities firm and its president,
Michael Ploshnick, of running a five-year scheme to artificially
inflate the price of almost two dozen companies.
A Manhattan grand jury also charged 19 former principals of
Meyers Pollock franchises and brokers who worked at satellite
offices in Las Vegas, Ft. Lauderdale and Boca Raton, Florida, and
on Long Island with participating in the fraud. Another 22 people
connected to Meyers Pollock were charged previously and have
already pleaded guilty, Morgenthau said.
In all, more than 16,000 investors were victimized, many of
them elderly, Morgenthau said. ``A woman who lived in a nursing
home lost more than $100,000 when Meyers Pollock brokers
conducted a number of unauthorized trades,'' he said. ``She lost
95 percent of her assets.''
And a 74-year-old retired pressman from Illinois was forced
to sell property and then take a job bagging groceries to help
pay for unauthorized margin trades, prosecutors said.
``There were victims all over the country,'' Morgenthau
said.
Today's indictment comes less than two weeks after a federal
grand jury charged Meyers Pollock, Ploshnick, and 11 brokers with
fraud for pumping up the price of worthless stock. Several of the
brokers had earlier been charged in unrelated cases involving
other allegedly corrupt brokerages, where they had also worked.
Meyers Pollock, which had headquarters in New York, closed
in December 1997, after regulators began probing the firm.
Bribes to Brokers
Manhattan prosecutors allege that four stock promoters, two
of whom have already pleaded guilty, paid bribes to Meyers
Pollock brokers who sold shares in 22 tiny companies. One of them
was QPQ Corp., which owned three pizza parlors in Krakow, Poland,
Morgenthau said.
Brokers would typically convince customers to open accounts,
at first recommending established stocks and later switching to
highly speculative companies, Morgenthau said. ``Brokers falsely
assured customers that the price of these stocks would rise
quickly,'' Morgenthau said.
As share prices rose, the stock promoters and brokerage
principals would sell their own holdings, realizing fast profits
while investors suffered large losses, prosecutors said.
``They'd run up the stock and sell out their own nominee
accounts,'' Morgenthau said. ``The investors, the general public,
would lose.''
Prosecutors also allege that the defendants used offshore
accounts to launder their illicit profits. Two men have been
accused of money laundering. Prosecutors would not comment on
whether organized crime was also involved in the alleged scheme.
Little of the stolen money has been recovered, authorities
said. Prosecutors have seized $1.8 million from one defendant's
account in Guernsey, in the UK's Channel Islands, and they say
they are searching for other assets.
The accused face up to 25 years in prison on charges ranging
from grand larceny to enterprise corruption. All but one of the
newly indicted defendants has been arrested.
State securities regulators from Indiana, Alabama, and the
North American Securities Administrators Association, among
others, helped bring the case.
--David Glovin in U.S. District Court in New York (212) 732-
9245,or at dglovin@Bloomberg.net, through the New York newsroom
(212) 893-3665/ep |
