Ex-AS Goldmen Officers on Trial in $100 Million Stock Fraud
New York, Feb. 5 (Bloomberg) -- Millenium Sports Management Inc. sounded like a company on the move, if you were a customer in the 1990s of the A.S. Goldmen & Co. brokerage.
Millenium principals included then-Texas Governor George W. Bush, former Vice President Dan Quayle, and golf legend Arnold Palmer, according to one investor who was called by a Goldmen broker pushing the stock.
Another was told that the firm was building a golf course to host a major professional tournament and already had a network television contract lined up for it, Assistant District Attorney Paul Mahoney told jurors today, as trial began for six high- ranking officers of the defunct brokerage. The firm, which shut down after its Florida offices were raided in 1998, is also a defendant.
``Actually, (Millenium) was in such terrible financial shape that the only way the company could be bailed out was to issue new stock,'' Mahoney said during opening arguments in Manhattan.
Goldmen and its former executives are accused of defrauding investors of more than $100 million over the past decade by rigging initial public offerings for small company stocks and hyping tiny, marginally traded companies to unwary customers, authorities say.
The New Jersey-based brokerage, which once had nearly 100 brokers and 50,000 accounts, is charged with enterprise corruption, scheming to defraud investors, criminal possession of stolen property and money laundering for its role in the sale of 10 securities, including eight IPO's underwritten by Goldmen. The firm once had offices in Manhattan, Iselin, New Jersey, and Naples, Florida.
Missing Man
One Goldmen principal is noticeably absent from the courtroom: former Chief Financial Officer Stuart Winkler, who was convicted in December of plotting to hire a hit man to kill the judge in the case, State Supreme Court Justice Leslie Crocker Snyder.
Winkler, who will be tried separately, is serving a prison term of 8 1/3-to-25 years for that conviction. Snyder is presiding over the current trial, but has recused herself from the government's case against Winkler.
Even though he was nowhere to be seen, Winkler emerged as a major figure in Mahoney's remarks to the jury and was described frequently as one of the three most important people at the Goldmen brokerage. Winkler and Goldmen president Anthony J. Marchiano engineered the rigged IPO's, Mahoney said, describing them as ``pump and dump'' schemes.
He said Winkler placed warrants for the future purchase of certain stocks in nominee accounts. After Goldmen brokers heavily promoted them, the warrants were later re-sold to investors at much higher prices, before the stock collapsed.
As part of Goldmen's ``basket of tricks,'' Mahoney said, brokers would lie or exaggerate the prospects for certain companies in their pitches to investors.
`Men Who Made Gold'
``They made many baseless recommendations,'' he said. ``All they were really doing was saying anything they could to get a sale. They did this all day long.''
A number of officers also had others take their licensing exams for them, including Marchiano's brother, Salvatore, the head trader and manager of the New Jersey office, according to the indictment.
Mahoney told jurors that the Marchiano brothers concocted the name, A.S. Goldmen, to make it sound like Goldman Sachs & Co. The ``A'' stood for Anthony, the ``S'' was for Salvatore, the prosecutor said.
``They called themselves the men who made gold,'' Mahoney said. ``And they made it -- for themselves.''
The trial is expected to last several months.
Feb/05/2001 15:52 ET
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