And More Interesting Reading for Us GYMMRats (3):
New York, March 30 (Bloomberg) -- The chairman of HealthTech International Inc. hired an organized crime associate and a disbarred lawyer to illegally prop up his company's stock, the ex- lawyer testified.
Federal prosecutors have charged that the stock promotion was part of a campaign by mob figures to move in on Wall Street.
Irwin Schneider, an ex-lawyer and three-time convicted felon, told a federal court jury that Gordon Hall, the chairman of HealthTech, knew that the plan to boost his company's stock price was illegal. Hall was eager to improve HealthTech's share price so the Mesa, Arizona-based health club chain could expand, Schneider said. ''He raved about the company. I told him his company'' had problems, Schneider said while testifying for the government.
Hall and Michael Motsykulashvili, a former stockbroker who sold HealthTech shares, are on trial in what prosecutors call organized crime's boldest attempt to enter the securities business. Twenty defendants reaped more than $1.3 million in illegal profits in 1997 by manipulating HealthTech's value and selling inflated stock to investors, prosecutors said.
Since federal prosecutors announced the case in November 1997, 14 people have pleaded guilty. They include four alleged members of the Genovese and Bonanno crime families in New York and stock promoter Eugene Lombardo, an alleged associate of both families.
Prosecutors contend that Hall, Schneider, Lombardo and another stock promoter, Claudio Iodice, bribed brokers at Meyers Pollock & Robbins in Long Island, New York, to entice the brokers to sell HealthTech shares. Motsykulashvili is among the Meyers Pollock brokers accused of receiving bribes.
Hall, 45, and Motsykulashvili, 26, deny the charges. If convicted of the racketeering and fraud counts, they could face 20 years in prison and fines. 'Spread of Food'
Schneider testified that the HealthTech arrangement began with a meeting in December 1996 at his home in Boca Raton, Florida. His wife prepared a ''spread of food'' for Hall, Lombardo and Iodice, he said. Hall initially balked at the demand from his three associates for 500,000 shares of HealthTech as compensation, Schneider said.
Several days later, the three men reached an agreement, crafting a bogus consulting deal with HealthTech that called for them to do financial work for the company, he testified.
Prosecutors contend that the agreement was drafted to disguise the bribes Hall would pay to his three business associates. Hall's attorney said the agreement is a legitimate contract for HealthTech to hire stock promoters.
Prosecutors played tapes for the jury of cell phone conversations they had tapped during an eleven-month undercover investigation. Hall could be heard telling Lombardo that he was pleased with HealthTech's stock movement in early 1997. ''Well, the stock sure moved nicely today,'' Hall told Lombardo, according to prosecutors' transcripts. ''Claudio said you're gonna do a nice job again tomorrow.'' ''Yes, we are,'' Lombardo replied.
Hall's attorney, James McGuire, maintains that Hall didn't know about any wrongdoing committed by the people he hired and didn't know about Lombardo's alleged mob ties.
Lombardo and Schneider previously pleaded guilty in the HealthTech case and await sentencing. |
