RE:Financial web->Market place: Corporate wrongdoers often are repeat offenders
Wednesday, March 13, 2002
By FLOYD NORRIS, New York Times News Service
NEW YORK — As securities fraud cases go, the crime that Lionel Reifler admitted to on Tuesday was not particularly extraordinary. He pleaded guilty to conspiring to rig the price of a stock traded on the over-the-counter bulletin board.
The stock in question was one few have ever heard of, FinancialWeb.com Inc. Back in the happy days of early 2000, when it was possible to sell almost anything with a connection to the Internet, shares in that company, which operated a financial web site, sold for as much as $10.44 a share. On Tuesday, the price was one-tenth of a cent, and the Web site was nowhere to be found.
Had federal investigators not managed to record a couple of telephone conversations in which several people discussed a plan to drive the stock up so that one shareholder could dump his stock, that rise and fall would probably have gone unnoticed by everyone save those who made and lost money in the case.
As it was, Reifler on Tuesday became the fifth person to plead guilty to charges relating to that pump-and-dump scheme. A sixth defendant is expected to enter a plea soon.
His plea was entered before Judge Sidney H. Stein of U.S. District Court in a 23rd floor courtroom in the new federal courthouse in Manhattan. Had this reporter not attended the plea, there would have been no witnesses aside from those required to be present.
It may be no surprise that his family did not turn out. In addition to a charge of conspiracy to commit securities fraud, he pleaded guilty to two counts of credit card fraud. In those cases, he was charged with obtaining credit cards in the name of two of his daughters and running up bills he had no intention of paying.
What is remarkable about Reifler, who will turn 63 later this month, is his long history. He has been in and out of trouble for various financial crimes for most of his adult life. This was his seventh conviction, but only two of his previous convictions caused him to be sent to prison. In each case, he served a little more than a year, said his lawyer, Martin Rafkin of Miami.
Over the years, Reifler, a resident of Boca Raton, Fla., has been involved with savings and loan frauds, a phony mutual fund and even a brokerage firm that prosecutors said was tied to the Mafia. He has testified that he was once dangled out a seventh story window by mobsters upset about an unpaid debt.
In most of those cases, he does not appear to have been the organizer of the fraud. He was, rather, a guy you could call to get help if you needed to rig a stock or find a way to cash in some dubious or worthless securities.
"Every time I have been arrested resulted in a conviction," he told a lawyer for the Securities and Exchange Commission in 1993.
But while a bank robber caught that many times would probably have faced long sentences, Reifler managed to have different convictions punished with concurrent sentences and had sentences reduced by his willing cooperation with the authorities.
That pattern began early in his career. In 1971, he willingly testified before a .Senate committee after he was convicted of conspiring to defraud an insurance company. It was there that he told his tale of being dangled outside a seventh-floor window of his Manhattan office. Reading the testimony now, he sounds like an earnest but naive man who may not have been especially honest but did not completely understand what he was getting into.
"We have heard a lot about suckers in these hearings," Sen. John L. McClellan of Arkansas said to him. "Are you pleading guilty to being a good sucker?"
"Yes I am, Senator" Reifler replied. "One of the biggest."
Asked whether he had sought a ruling from the SEC that one dubious transaction was legal, he replied, "At that time I didn't even know what the SEC was."
These days, he knows what the SEC is, but it is not clear that he has paid much attention to it. The SEC has obtained three injunctions barring him from violating securities laws, but his career does not seem to have been affected by that.
Such white-collar recidivists are receiving attention these days. "I have only been back at the commission three months," Harvey L. Pitt, the SEC chairman, said in a speech last November, "but I am appalled by the number of repeat offenders we seem to confront at virtually every commission meeting." He said the commission hoped to see more criminal prosecutions.
On Tuesday, Reifler declined to be interviewed after he entered his plea and was released on bail, with his sentencing set for June 28.
The Justice Department wants Reifler to serve some real prison time after this conviction. Chris Clark, the assistant U.S. attorney who prosecuted Reifler, said on Tuesday that he believed sentencing guidelines would call for him to be sentenced to 63 to 78 months in prison, but that in light of his long record the government would ask the judge to raise that to 90 to 105 months — that is, up to eight years and nine months.
Rafkin, who has represented Reifler over the years in many of his brushes with the law, said he would dispute the prosecutor's assertion that investors lost more than $7 million and would seek a much lower penalty. |
