Re: 4/19/04 - [Chalem/Lehmann murders] AP: Lawyer admits securities fraud
Lawyer admits securities fraud
By WAYNE PARRY
Associated Press Writer
April 19, 2004, 7:15 PM EDT
NEWARK, N.J. -- A Beverly Hills attorney who once represented one of two businessmen found shot to death in a Colts Neck mansion admitted participating in the same type of securities fraud in which the victims had engaged.
Allen Barry Witz, 63, was one of the last people to see Alain Albert Chalem and Maier S. Lehmann alive before they were gunned down in October 1999, a law enforcement source said. Prosecutors say he is not a suspect in the killings.
Monmouth County prosecutors said the pair had used the Internet to tout low-priced stocks, pump up their value, and sell their shares for a huge profit before the stock price collapsed. No one has been charged with the killings.
In Monday's proceeding in U.S. District Court, Witz admitted conspiring with two New Jersey men and others to hype a stock that purported to be the Latin American equivalent of America Online, then selling the shares for $1.3 million before its price crashed.
He pleaded guilty to conspiracy to commit securities fraud in connection with Global Datatel. He said he and others fraudulently used the Internet to tout the Florida-based company as a fast-growing, profitable venture, along with its Latin American subsidiary, eHola.com Online Service Network.
In a brief interview after pleading guilty Monday, Witz said he had "done some legal work" for Chalem about a year before the killings, and had not seen him after that.
His lawyer, Lawrence Feld, said Witz "has been cooperating with the government for at least three years, much of it in a deep undercover capacity," but neither he nor Witz would say if his cooperation extended into the homicide probe in Monmouth County.
Robert Honecker, Monmouth County's first assistant prosecutor, said thus far Witz has not assisted in the homicide probe. But his office has been working with the U.S. attorney's office since shortly after the killings due to the tangled web of business dealings in which the victims engaged. He said Witz had business relationships with both victims, which are still being investigated.
The charge to which Witz pleaded guilty also identifies by initials only two New Jersey men _ J.L. of Clifton and S.B. of Marlboro _ who allegedly conspired in the pump-and-dump scheme. Two other co-conspirators are identified as R.B. of Boca Raton, Fla., the chief executive officer of Global Datatel, and M.H., a Colombian citizen living in Davie, Fla., who was president of eHola.com. All four are unindicted co-conspirators.
Witz admitted he and his co-conspirators used false and misleading press releases and interviews, investor "road shows" and a stock-picking Web site, www.imcadvisors.com to tout Global Datatel and eHola.com to raise and maintain the stock price of Global, which was traded on the Over-the-Counter Bulletin Board, under the symbol GDIS. The stock-picking Web site was controlled by S.B., according to court documents.
They gave interviews to media outlets including New York Newsday, Fox News and the Austin American Statesman touting the company, making claims they knew to be false, including an assertion that they had mailed 4 million compact discs with the service's software to homes throughout Latin and Central America; only 100,000 to 150,000 were ever mailed, and the company had no subscribers or revenue, Witz told the judge.
Witz admitted he, J.L. and R.B. secretly controlled Global Datatel shares totaling 3.3 million, 3.6 million and 4 million, respectively. From about January to April 1999, through their fraud scheme, Witz and his co-defendants caused Global's stock price to rise from $7.25 a share to a high of $16.84 a share, increasing the market capitalization from approximately $163 million to nearly $379 million.
U.S. Attorney Christopher Christie said the investigation into Global Datatel and others associated with it continues.
Witz faces up to five years in prison and a $250,000 fine or twice the gross proceeds of the fraud or twice the loss to any victims when he is sentenced July 27. He was allowed to remain free on $100,000 bail.
Copyright © 2004, The Associated Press |
