Two Men Plead Guilty to Cheating Investors at Sterling Foster
New York, Sept. 8 (Bloomberg) -- Two men affiliated with Sterling Foster & Co., a defunct Melville, New York brokerage, pleaded guilty to charges that they helped cheat investors of $200 million by manipulating the price of stocks the firm underwrote and sold.
Sterling Foster, which once had 275 brokers, closed after the FBI and U.S. Postal Inspectors, armed with search warrants, raided its offices in 1997. The firm was secretly controlled by Randolph Pace, the former owner of defunct brokerage Rooney Pace Inc., and two other men, prosecutors said. The secrecy was needed because Pace had been suspended by regulators from working in the brokerage industry for previous violations, prosecutors said.
Pace, 54, of Manhattan, pleaded guilty today to 13 counts of conspiracy and securities fraud. Under a plea agreement, the government will seek a sentence of 87 to 108 months in prison. He told Judge Loretta Preska of U.S. District Court in New York that he made $2.9 million from his crimes.
Warren Schreiber, 44, of Roslyn Heights, New York, pleaded guilty today to nine counts. He and Alan Novich, an attorney and former dentist, were accused of secretly controlling the company along with Pace. Schrieber will face 63 to 78 months in prison.
Novich pleaded guilty last month.
Prosecutors accused three men and four other former Sterling Foster executives of engaging in fraudulent sales practices, market manipulation, failing to disclose excessive stock-price mark-ups, and other crimes between 1994 and 1997. Cases against the other defendants are pending.
Prosecutors accused Sterling Foster of rigging stock prices by nearly monopolizing trading in those shares. Sterling Foster bought millions of shares at a discount from the issuing companies' insiders shortly after their initial public offerings, enabling the brokerage to control prices, prosecutors alleged.
The charges involved Sterling Foster's underwriting or sale of Lasergate Systems Inc., Advanced Voice Technologies Inc., Com/Tech Communication Technologies Inc., Embryo Development, Applewoods Inc. and ML Direct Inc.
Preska set sentencing for Pace for Dec. 21.
Sep/08/2000 18:00 ET
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