Rogue brokers use names of 9/11 victims
By Christopher Carey
Of the Post-Dispatch
02/13/2005
Rogue brokers targeting foreign buyers of U.S. stocks have added a macabre twist: Their aliases are derived from victims of the Sept. 11, 2001, terrorist attacks.
Nearly all 22 executives and account managers listed on the Internet site for Bailey & Bennett Mergers and Acquisitions Inc. are actual or scrambled names of people who died in the World Trade Center, the Pentagon or on the four airliners the terrorists hijacked and crashed.
Representatives of Bailey & Bennett have been calling investors in the United Kingdom in recent weeks, offering to buy back worthless shares of obscure U.S. companies at big premiums. It uses a slick Web site to create the appearance of legitimacy.
The Web site lists the headquarters on the second floor of a New York City office building. But all the space on that floor is leased to the city.
The New York Division of Corporations has no record of Bailey & Bennett, nor does the U.S. Securities and Exchange Commission or the National Association of Securities Dealers.
The link with the terrorist attacks came to light as the Post-Dispatch continues to monitor activities of unlicensed offshore brokerages, known as boiler rooms, which push foreign investors to buy shares of largely worthless U.S. stocks.
A series of stories last year showed how the boiler rooms took in hundreds of millions of dollars by selling shares in roughly 200 public and private U.S. companies.
A cross-reference of personnel listed on the Bailey & Bennett Web site repeatedly turned up names from the 2001 attacks. The names of two purported employees directly match Sept. 11 victims.
The site lists the chief executive as Steven Jacoby. That was the name of a telecommunications executive who died aboard American Airlines Flight 77, which crashed into the Pentagon.
The site also identifies Mandy Chang as an account manager. She was a bank employee who perished at the World Trade Center.
The Post-Dispatch analysis suggests that the people behind Bailey & Bennett created other identities by switching first and last names for some victims. For example, account managers Donald Broghammer and Herman Burns versus victims Herman Broghammer and Donald Burns.
When a reporter called Bailey & Bennett and asked the person who identified himself as Brian Colaio why he and others are using the names of Sept. 11 victims, he denied it. "Is this a joke?" he said.
He referred the reporter to Bailey & Bennett's managing director Brian Penniger. That last name, too, is a match for a Sept. 11 victim. Penniger did not call back.
Bill Doyle, a former stock trader who lost a son at the World Trade Center, said in a phone interview that he hoped the misuse of victims' names would not cause further stress for their families.
"It's unfortunate if these people have to start reliving 9/11 because of some scam artists," said Doyle, outreach director of the WTC United Family Group in New York. The nonprofit organization provides support for families of Sept. 11 victims, survivors and rescue workers.
Bailey & Bennett offers to buy the near-worthless shares foreign investors own, saying it wants to assemble a majority stake in the company. The catch: They must pay thousands of dollars up front to ensure that the transactions go through. Investors who go along with such schemes typically never see their money again.
The operations are known as boiler rooms, because they use high-pressure sales tactics to promote risky or fraudulent investments. Brokers typically use false names to avoid detection and prosecution.
A second boiler room that began calling investors in recent weeks also is using aliases taken from the Sept. 11 dead. Fifteen of the 22 people listed as employees on the Internet site of Nationwide Mergers & Acquisitions Inc. have the same last names as people who died in the terrorist attacks.
For example, one name, Kris Bishundat, matches that of a passenger on Flight 77. Two last names on the personnel list are the same as pilots Charles "Chic" Burlingame and David M. Charlebois.
It appears that Charles Burlingame's name was crossed with that of a World Trade Center victim, Scott D. Bart, to create two new identities - Scott Burlingame and Charles D. Bart. Charlebois' name was crossed with that of another World Trade Center victim, Gerald Atwood, to create Gerald Charlebois and David M. Atwood.
Many of the names used by both boiler rooms were near the top of the victims' list, in the first three letters of the alphabet.
Exploiting the names of the cockpit crew and others is "utterly disgusting," said Gregg Overman, communications director of the union that represents American Airlines pilots. "There is surely a special place for people like that."
Bailey & Bennett is targeting people with shares in Stem Genetics Inc. of Salt Lake City, Diversified Financial Resources Inc. of San Diego, and F10 Oil and Gas Properties Inc., now known as GFY Foods Inc. and based near Chicago.
The foreign investors bought stock in those companies a few years ago from Sukumo Group Ltd., which claimed to be a brokerage in Tokyo but really operated from Laos.
The Securities and Exchange Commission filed a civil suit in October 2003 against the three U.S. companies, their top executives, Sukumo and more than a dozen other defendants.
The SEC alleged that they engaged in a "massive scheme to defraud investors" that took in more than $16 million. The regulatory agency is continuing to prosecute the Sukumo case. It also is gathering information on new boiler rooms that appear to be targeting foreign investors from Sukumo's customer list.
"It's horrible even without using the 9/11 dead," said Kenneth D. Israel Jr., director of the SEC's office in Salt Lake City, which is handling the fraud suit. "These people have already been defrauded once."
The FBI also is involved, having seized computers from companies involved in the Sukumo case.
Nationwide's callers offer to buy back stock sold by another Asian brokerage that calls itself Premium Placements Management.
Georgia's secretary of state has no record of Nationwide, which lists its headquarters as Atlanta. Nor does the SEC or NASD.
Phony address
Bailey & Bennett is the latest in a series of purported financial firms that have contacted investors who bought shares in obscure U.S. companies from Sukumo, which shut down in 2003.
Its British proprietor, Michael Sydney Newman, is in a Laotian prison.
Bailey & Bennett's Web site says its offices are on the second floor at 40 North Rector Street in lower Manhattan.
"There's nothing on the second floor other than the Civilian Complaint Review Board," said Andrew Case, outreach and research coordinator for the agency, which handles complaints against police officers.
In fact, nearly all of 40 North Rector is leased to the city, he said.
The building is about four blocks south of Ground Zero, where the twin towers once stood, and was closed for several months after the attacks.
Much of the text on Bailey & Bennett's site is stolen from USBX Advisory Services LLC, a legitimate investment-banking firm with headquarters in Santa Monica, Calif.
That same text has been used for the Web sites of a handful of other purported financial firms that previously called Sukumo customers with offers to buy back shares.
"We have no affiliation whatsoever with any of the firms whose Web sites you provided us," said Brooks Dexter, senior managing director.
USBX was unaware the boiler rooms had lifted its text until notified by the Post-Dispatch, he said.
Avoiding detection
Charlie Cory, a British computer consultant and investor, said a man who identified himself as Donald Broghammer of Bailey & Bennett called him out of the blue Jan. 20 with a pitch to buy back his Diversified Financial shares.
The stock has been trading for a fraction of a penny per share.
Cory said the caller, who sounded like an American or Canadian, even spelled out the unusual last name.
The person Cory knew as Broghammer claimed an Asian investment group had acquired 48 percent of Diversified Financial and wanted a majority stake. The caller said the firm got Cory's number and information about his holdings from a U.S. investor-protection agency.
The caller pointed Cory to a Web site for the agency, which regulators have warned is bogus.
Cory was contacted by the Post-Dispatch through an Internet message board, set up to exchange information about boiler room schemes.
"These people are sick," Cory said. "Even knowing what they do, I'm astounded."
Ursula Broghammer, the widow of Herman Broghammer, said Bailey & Bennett might have adopted the names of Sept. 11 victims to avoid detection.
"Maybe they felt that it would be the easiest way to do it," she said in a telephone interview. "No one would be looking for them."
Although the use of the names by Bailey & Bennett is hurtful, she said nothing could be worse than the pain of losing a loved one in the attacks. "What else could they do?"
COMPARISON OF NAMES
Here is a comparison of the names used by representatives of Bailey & Bennett Mergers and Acquisitions Inc., a purported investment firm, and the names of people killed in the Sept. 11, 2001, terrorist attacks:
Bailey & Bennett Sept. 11 victims
Steven Jacoby (chief executive) Steven Jacoby (American Airlines Flight 77)
Mandy Chang Mandy Chang (World Trade Center)
Donald Broghammer Herman Broghammer (World Trade Center)
Herman Burns Donald Burns (World Trade Center)
Brian Colaio Stephen Colaio (World Trade Center)
Steven Cachia Brian Cachia (World Trade Center)
Jonathan Breitweiser Ronald Breitweiser (World Trade Center)
Ronald Briley Jonathan Briley (World Trade Center)
Diane Bartels Carlton Bartels (World Trade Center)
Carlton Simmons Diane Simmons (American Airlines Flight 77)
Thomas Boccardi Michael Boccardi (World Trade Center)
Michael Bowden Thomas Bowden (World Trade Center)
Judy Frost Judy Larocque (American Airlines Flight 11)
Lisa Larocque Lisa Frost (United Airlines Flight 175)
Dennis Beekman Michael Beekman (World Trade Center)
Michael Bird Gary Bird (World Trade Center)
George Reuben (chief financial officer) Todd Reuben (American Airlines Flight 77)
Brian Penniger (managing director) Robert Penniger (American Airlines Flight 77)
Stephen Carlino Edward Carlino (World Trade Center)
Nicholas Hashem (senior vice president) Peter Hashem (American Airlines Flight 11)
Reporter Christopher Carey
E-mail: ccarey@post-dispatch.com
Phone: 314-340-8291 |
