Is this the same "Robert Pratt" in the anthrax story?
21 Charged in Notorious Stock 'Boiler Room'
Brokers Accused of Using Unscrupulous Tactics
Feb. 9, 2000
By Carol Huang
NEW YORK (APBnews.com) -- Federal authorities today indicted 21 brokers and
dealers who worked for one of Wall Street's most notorious "boiler room"
operations before an investigation forced it to close.
Among those indicted were former supervisors and managers at Sterling Foster
& Co., which shut its doors in 1997 shortly after the U.S. Securities and
Exchange Commission (SEC) obtained a court order that February to suspend the
firm's activities.
The investigation into Sterling Foster & Co. unveiled a particularly
egregious example of a Wall Street "boiler room," a firm at which brokers
push dubious stocks using a variety of unscrupulous tactics and make it
virtually impossible for clients to sell their holdings once prices fall.
"At its peak, there were approximately 400 brokers at Sterling Foster, and
our investigation is continuing," said Andrew Geist, senior associate
regional director for the SEC in New York, whose office has filed civil
charges of fraud against 18 of those indicted.
Geist added that some say the firm's notoriety helped inspire Boiler Room, a
movie opening this month that depicts the scramble among young brokers
pressured to sell questionable stocks.
Company president pleaded guilty
The indictment filed by the U.S. attorney's office for the Southern District
of New York accuses the indicted brokers of baiting clients with blue-chip
stocks before convincing them to switch into stocks that were being
manipulated by the firm. The indictment also alleges that the brokers made
unauthorized purchases in their customers' accounts and failed to take and
execute customers' requests to sell out of bad holdings.
The indictment said the brokers used these tactics in six public offerings,
five of which were underwritten by Sterling Foster. These six public
offerings were the same named in a November 1998 indictment against Randolph
Pace and Alan Novich, whom investigators say secretly controlled Sterling
Foster.
Investigators in that case accused Pace and his associates of earning more
than $200 million in illegal profits.
Sterling's president, Adam Lieberman, pleaded guilty to securities fraud in
November 1998, Geist said.
The indictment said the brokers worked at Sterling Foster from 1994 to 1997.
It accuses the men of other common boiler-room tactics, including the use of
scripted pitches to sell stocks and the coercion of clients, who were told
they would have to buy a stock after it became available on the market before
they were given access to an initial public offering of the stock.
Suspects face five-year sentences
The brokers named in the indictment are Frank Monroig, 39, and Andrew Tursi,
30, of St. James; Timothy Matthews, 39, of Stonybrook; David Abish, 30, of
New York City; Christopher Betts, 31, of Kings Park; Mark Charvat, 26, and
James Corcoran, 27, of Patchogue; Michael Cohn, 29, of Lawrence; Charles
Distefano, 31, of Middle Island; Paul Feeny, 27, of Stamford, Conn.; Joseph
Ferrante, 28, and David Weeks, 29, of Huntington; Stephen Gourlay, 28, of
Hicksville; Brian Kearney, 31, of Farmingdale; Michael Maccaull, 28, of
Hauppage; John Massaro, 33, of Commack; Robert Pratt, 30, of Coram; Dennis
Rueb, 27, of Glendale; William Scuteri, 29, of Charlottesville, Va.; Scott
Siegel, 28, of Dix Hills; and Donald Turney, 29, of Pompano Beach, Fla.
Five of the brokers indicted also worked at VTR Capital Inc., another firm
that has since become defunct, prosecuting attorneys said.
The brokers face one count of securities, mail and wire fraud and five counts
of securities fraud. Each faces up to five years in prison for the first
charge and $250,000 or more in fines. On the second charge, each count
carries a maximum penalty of 10 years in prison and $1 million or more in
fines.
Carol Huang is an APBnews.com staff writer (carol.huang@apbnews.com). |
