Trust Manager Recounts Brennan Handing Off Black Case of Bonds
Trenton, New Jersey, March 9 (Bloomberg) -- An Isle of Man
trust manager told federal jurors today that former stock promoter
Robert E. Brennan handed him a black case full of easily
transferable bonds just days before government regulators won a
$75 million judgment against Brennan.
Brennan, the founder of defunct First Jersey Securities Inc.,
is accused of filing a fraudulent bankruptcy petition after the
Securities and Exchange Commission won that judgment in 1995.
Prosecutors allege that Brennan failed to tell his creditors about
the $3.8 million in bonds he handed Peter Bond of Valmet Group.
Bond, whose firm had previously set up three trusts for
Brennan, recalled meeting the fallen stock promoter at Brennan's
horse farm in Colts Neck, New Jersey in June, 1995. At that
meeting, Bond said, Brennan gave him the black case.
``He asked me to look after them, pending final
instructions,'' Bond told federal jurors in Trenton.
Bond, who testified under a grant of immunity and may be the
government's most important witness, told Assistant U.S. Attorney
Paul Weissman that he later learned that Brennan had filed for
bankruptcy protection.
The 13-count indictment against Brennan, who once was New
Jersey's most prominent stock promoter, also accuses him of
failing to disclose to creditors about $525,000 in casino chips
that he cashed at a Las Vegas casino in September, 1995.
Sailing, Flying
In his opening argument this week, Weissman said Brennan sank
$22 million into three trusts at Valmet and earned nearly $20
million in profit. While concealing money from his creditors,
Brennan flew around the world, rented expensive yachts, and took
cash deliveries from Valmet employees, Weissman argued.
Bond, who testified today for 90 minutes and will return to
the stand Monday, said that Valmet estimated Brennan's worth at
between $200 million and $500 million when he came to the firm in
1992.
``He was an individual obviously of substantial means,'' Bond
recounted. Brennan, who is a tenant on his former horse farm and
has an oceanfront home in Juno Beach, Florida, claims he now has
no money.
During opening arguments, defense attorney Michael Critchley
attacked Bond as a liar who laundered money for Russian
corporations and stole money from his clients' trust funds.
Critchley will begin cross-examining Bond next week.
Secrecy
Bond testified that he is selling his 46 percent stake in
Valmet, one of hundreds of firms on the Isle of Man that establish
trusts and corporations for clients craving secrecy.
Valmet, he said, assigns clients to pre-existing
corporations. Bond said his company typically will list its own
employees as owners or directors to provide more secrecy to its
clients.
He told jurors how Valmet set up offshore accounts around the
world so that outsiders could not pierce the corporate veil to
discover who controlled companies. The arrangements also let
clients take advantage of tax laws in different countries.
Bond said that Valmet would not set up accounts for people
engaged in ``heinous'' crimes, but that it was difficult to weed
out people sheltering money from tax collectors.
``The gray area in our business has historically been tax and
exchange control,'' Bond said.
Bond said that his firm has tightened its standards in the
past five years. Weissman asked how he would have reacted five
years ago if someone set up a trust to evade taxes.
``We would not have been ecstatic, but neither would we have
been jumping out the window,'' Bond said.
Aside from his stock promotions, Brennan founded
International Thoroughbred Breeders Inc., which formerly owned two
New Jersey racetracks, Garden State Park and Freehold Raceway.
His attorney said he also gave away more than $25 million to
Seton Hall University and St. Benedict's Preparatory School in
Newark, his two alma maters.
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