MONEY, MURK & MUCK By CHRISTOPHER BYRON
May 24, 2004 -- NEARLY half a decade has now passed since two Wall Street stockbrokers were found murdered in a mansion in the New York suburb of Colt's Neck, N.J. The case attracted a great deal of attention at the time, in part because of the glamorous and danger-filled lives the men had apparently been leading. And there was also the gangland style nature of the killings to arouse the curious: One of the two men had been shot at point-blank range in the nose, ears and forehead; the other had simply been shot multiple times in the head.
Both state and federal prosecutors opened investigations, but the murders went unsolved and as the months turned into years, the matter sank from view and was forgotten.
Yet in recent days, interest in the so-called Colt's Neck killings has flared back to life, rekindled as a result of charges that have been filed in several seemingly unrelated cases - from Brooklyn to Newark to Washington, D.C. In the process, fresh light is once more being cast on some of the murkiest corners of Wall Street, from the influence of organized crime in the penny stock market to the out-of-control and unregulated growth of the offshore hedge fund industry.
Much of the connective tissue in these matters comes by way of a Beverly Hills lawyer named Allen Barry Witz, 63, who sometimes turned up in the middle of Mob-connected penny stock deals during the 1990s, and whose business associates reportedly included, at some point, the two murdered Colt's Neck brokers.
Witz is not a suspect in the murders. And neither are any of the other individuals who have so far been swept up by the feds in probes for which Witz was well-positioned to provide helpful kibitzing input.
But at the least, Witz obviously knows a lot about the demi-world of Wall Street's dark side, especially with regard to the climate in which the killings occurred, and indisputable evidence of that fact has now emerged. The proof came last month during an appearance in a Newark, N.J. federal court when Witz pleaded guilty to conspiracy charges in a 1999 scheme to pump up the price of a dot-com penny stock he controlled called Global DataTel Inc.
During the proceedings - and in an apparent bid for leniency in the case - Witz's lawyer informed the judge that Witz had in fact been working as a secret federal stool pigeon in a "deep undercover capacity" for the past three years. When questioned by reporters afterward, neither Witz nor his lawyers would say whether the help included the Colt's Neck case, which Witz has claimed he knows nothing about.
The remarkable outing of Witz as a federal snitch by his own lawyer has certainly ended Witz's usefulness to the government as an undercover informant, and after the hearing it hardly seemed surprising to hear him mutter darkly to reporters about fearing for his safety.
Yet the recent and sudden eruption of several long-dormant cases - all connected either directly or indirectly to Witz and those with whom he crossed trails - make plain enough that he has had plenty to offer the feds from the start. In the frenzied penny stock world of the 1990s, Witz had been a player, alongside some of the scariest people on earth, in some of Wall Street's riskiest and most dangerous stock deals ever.
AMONG those individuals was a man named Philip Abramo, a reputed capo in the DeCavalcante crime family of New Jersey. At the start of the 1990s, Abramo muscled his way into control of a Wall Street brokerage firm called Sovereign Equity Management Corp., and by the end of the 1990s he was facing charges of loan sharking, racketeering and securities fraud, for which he was finally convicted last year in a New York federal court.
One of Sovereign's employees at the time was a young man named Slava Volman. With barely three years under his belt at Queens College and no prior experience on Wall Street, Volman was just learning the ropes when Abramo took over the firm. In 1995, Volman left Sovereign to join a firm called E.C. Capital, where he and two associates became involved in illegally pumping stocks on Internet message boards; all were eventually fined by both Connecticut state regulators and the National Association of Securities Dealers.
In 1998, Volman left E.C. Capital and started up a new office, in Garden City, L.I., for a New Jersey brokerage firm called Donald & Co. Securities Inc. From that perch, Volman and his crew began aggressively touting the stock of a company called Classica Group Inc., which had changed its name only months earlier from Saratoga Brands Inc. The company happened to be one of many that Witz himself controlled, either outright through his ownership of its stock or through the web of his friendships.
But Volman's stock-pumping efforts seemed to escape the attention of the regulators and he soon moved on to other employers, surfacing last October at a fast-growing offshore hedge fund called Alexandra Investment Management LLC. The fund, run largely by Russian émigrés, had reported just $25 million of assets under management at the start of 1998. Today the fund claims a portfolio worth more than $2.4 billion. Its only known investor appears to have been an insolvent Moscow bank with a history of regulatory infractions.
Consider the fund's head of business development, one Andrew K. Joseph, who changed his surname to Pernambuco in 1997. Press releases from the fund say Pernambuco holds undergraduate and graduate degrees from M.I.T., but the university registrar says he dropped out halfway through his junior year and never returned. The press releases describe Pernambuco as a "medallist" in the 1984 Los Angeles Summer Olympics, but the International Olympic Committee database has no entries under either of his names.
Volman apparently fit right in: Although he'd had six jobs and two serious regulatory violations in an eight-year Wall Street career, the fund hired him as "head of private placements" last October.
From that perch, Volman had only recently wrapped up a $5 million stock-and-warrant private placement deal with Harken Energy Corp. when his four-year old ties to Classica Group Inc. at last caught up with him and federal prosecutors from Brooklyn turned up to arrest him on charges of conspiracy, stock fraud and money laundering in connection with the Witz-linked stock.
NOR is Volman the only Wall Streeter from whom the feds have caught the whiff of Barry Witz. In 1997, Barron's reported that Saratoga Brands had failed to tell stockholders that its chairman, Witz, had been an unindicted co-conspirator in a federal wiretap case involving the Bonanno and Lucchese crime families.
On virtually the eve of the story's publication, Witz stepped aside as Saratoga's chairman, and into his place stepped a longtime Witz confederate named Scott G. Halperin.
Two months ago, Halperin was indicted by a federal grand jury in Brooklyn on charges of illegally pumping up the price of the company's stock.
And there's more. Following his court appearance in Newark last month, Witz told the Associated Press that he had "done some legal work" for one of the two Colt's Neck murder victims - Alain Chalem - about a year before the killings. And published reports say Witz in fact also had business ties to the second victim, one Maier Lehmann, who had recently settled SEC charges for illegally hyping the shares of a company called Electro-Optical Systems Corp. at the time of the murders.
Meanwhile, a stockbroker named Cosimo Tacopino from Volman's old firm, Donald & Co., had become yet another casualty of the federal probes that keep turning up connections back to Witz. This happened in late March, when Tacopino settled SEC civil charges and agreed to accept a ban from the securities industry in connection with having allegedly manipulated the market in shares of Electro-Optical.
So stay tuned on this one, because the tangled world of Barry Witz may only now be starting to unravel.
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