WALL STREET JOURNAL, September 3, 1998 POST 2 OF 2
CAPITAL GAME
Convictions for Fraud Don't Slow A Financier For Small Business
Ron Williams Accepted Fees But Raised Little Money For Many of His Clients
Detective's Dogged Pursuit
By Michael Schroeder
Staff Reporter of THE WALL STREET JOURNAL
Timely Delays
He proved proficient in winning delays. Once, when prosecutors sought to remove Mr. Marx as an attorney for another Select Capital Advisors defendant because he was also the firm's outside lawyer, Mr. Williams's lawyer kept appealing until the Supreme Court declined the case, consuming over two years.
Frustrated by such delays, Mr. Amandola began building a new case, relating to a Williams client called Akal International Corp., a real-estate company in Toronto.
Akal had hired Mr. Williams to merge it with a shell company. But according to state charges filed against Mr. Williams, he first bought up much of the shell-company stock cheaply, and then, after its merger with A"kal, persuaded 60 investors to buy the postmerger stock at about $14 a share. The investors were principals of Akal and their relatives, whom Mr. Williams guided to a particular broker in Denver. According to the state, the investors were told the stock would at least double after Mr. Williams arranged a secondary stock offering to raise capital.
The secondary never happened, the state later charged, adding that the stock - which it said was bought in a roundabout way from Mr. Williams himself - became worthless. The state accused Mr. Williams of bilking investors out of a total of $1.5 million.
On April 13, 1995, Mr. Amandola again arrested Mr. Williams, again hauling him downtown in handcuffs.
Once again, Mr. Williams was back working in his office the next day.
The cases languished as Mr. Williams's lawyers peppered the court with motions, including requests to sanction Mr. Amandola for overzealous prosecution. The defense also gave prosecutors names of more than 240 Williams character witnesses, whom Mr. Amandola felt obligated to check out, at a cost of several months. Many of them barely knew the defendant.
"We did what we set out to do," says Mr. Williams's lawyer, Mr. Marx. "We delayed the case for five years."
And Mr. Williams's firm kept doing business, running "tombstone" ads in papers, including The Wall Street Journal, claiming it had raised $453 million for clients in 1996 and $262 million in 1997.
His clients included Richard Secord of Iran-contra fame, vice chairman of a Portland, Ore., make of diagnostic equipment called Computerized Thermal Imaging Inc., or CTI. "I was impressed with him," Gen. Secord says. "He doesn't look or act like a hustler. He talks like a Wall Street guy."
"A Workout Situation"
In a suit in federal court in Miami, CTI says it paid Select $10,000 in upfront fees in return for a promise to raise $206 million, with the first $6 million expected from a private placement by mid-1997. Mr. Williams's failure to meet this timetable "forced us into a workout situation," says CTI's chief executive, David Johnson. Mr. Williams denies promising to raise $200 million. The CTI suit is one of dozens of civil suits Select Capital faces.
By last fall, the criminal cases had gone through two prosecutors and three judges. "A lot of people were getting hurt" by Mr. Williams, Mr. Amandola says, "and no one could seem to stop him."
To get the case moving, he wrote to Florida's statewide prosecutor, who assigned two veteran prosecutors to it. They eventually won a trial date of April 13 this year. Having lined up testimony from 30 companies and several former Williams employees, they offered Mr. Williams a plea bargain that included one year of hard prison time. It was declined. Mr. Williams's lawyers say Mr. Amandola trumped up the charges and has pursued a vendetta. He "made it his mission to get Ron Williams," says one Williams attorney, Jeffrey Weiner. "Amandola went over the line."
The case passed to its fourth judge and eventually its fifth, an 85-year-old retired jurist. The prosecutors grew worried that the judge was too frail to endure a lengthy trial. They also fretted that jurors would find the complex case difficult to grasp or that Mr. Williams might be able to sway them with his charisma. Finally, they struck the deal with Mr. Williams in which he pleaded guilty to fraud - including charges in the Akal case - but was left free to continue his business during the daytime. Mr. Amandola says he wasn't told the deal would do that until after it was done.
Why make a deal that lets a man just convicted of conducting his business fraudulently continue in business? "The important thing is it for victims to receive restitution, so it makes sense for Williams to continue working," says Jim Cobb, an assistant statewide prosecutor. The fine includes a $500,000 payment to Dade County.
Of course, Mr. Williams has to conduct his business lawfully. One charge to which he pleaded guilty was illegally accepting $600,000 in fees from 21 companies without delivering any promised financing. Prosecutors say the fees violate a state law barring solicitation of upfront fees for arranging loans. Mr. Williams's firm has continued to collect fees for financing from clients. He says they aren't upfront payments for financing, but payments for due-diligence reports.
Disclosure Issues
The deal also requires Mr. Williams to inform all existing and potential clients about his criminal and civil legal problems. Yet copies of two letters sent to prospective clients after the plea agreement (but before the sentencing) don't mention the recent guilty plea or past problems. Mr. Williams says he is complying by making available to clients a three-page disclosure letter. "Most companies already know about" the criminal record, he says. "I spend half my day talking to clients about it."
He adds that he stepped down as chairman of the company in July, but the firm will comply with the disclosure requirement, "at least for the time being."
On Tuesday, he was arrested and jailed for missing most of a $250,000 payment due on his fine-and-restitution bill. The man who took him into custody: George Amandola. "It's only my guess, but I think the judge will probably let him out," Mr. Amandola says.
Meanwhile, a spokesman for Britain's Serious Fraud Office says it is assisting the SEC in an inquiry by that agency. Mr. Williams says he isn't aware of any investigation by the SEC.
Mr. Williams's attorney, Mr. Marx, couldn't be reached for comment yesterday about the jailing. Speaking earlier, he expressed doubt that Mr. Williams could live up to all the terms of his plea bargain. "He's a brilliant guy," Mr. Marx said, "but he's a little nuts and has a very strange idea of right and wrong."
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