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"Also named in yesterday's indictment were ... Judah Wernick, 35, a principal of Patterson Travis, a brokerage firm with offices in New York ...":
Ex-Broker Faces Broader Federal Charges
By GRETCHEN MORGENSON
Randolph Pace, the man who prosecutors say was the mastermind behind a big securities fraud in the early to mid-1990's, was charged Thursday with directing a wider conspiracy that involved three brokerage firms, the manipulation of 11 companies' stocks and $200 million in illegal profits.
Pace, a former brokerage firm executive, has been under indictment since November on charges of manipulating the shares of six companies through Sterling Foster, a defunct New York securities firm that prosecutors say he secretly controlled. But according to a 26-count superseding indictment brought Thursday by Mary Jo White, the United States Attorney for the Southern District of New York, Pace's fraudulent activities were much more extensive. Previously, prosecutors had said that Pace and Sterling Foster had defrauded investors of $100 million.
Now they say that Pace, 53, and Alan Novich, 52, a longtime associate, also enlisted the aid of eight individuals, including employees and top management at VTR Capital and Investors Associates, two defunct brokerage firms, to help manipulate the stocks and reap illegal gains. Prosecutors say Pace, a founder of Rooney Pace Inc., a defunct brokerage firm, tried to conceal his involvement because he had been barred from the securities industry. Nevertheless, prosecutors say that he controlled Sterling Foster and VTR Capital, a firm that had offices in New York, Colorado, Florida, Georgia and Pennsylvania.
In a statement, Ms. White said, "Today's charges should serve notice that any violations of the Federal securities laws, even the most creative and complex schemes, will be uncovered by law enforcement and aggressively prosecuted."
Robert G. Morvillo, the lawyer representing Pace, said that his client intended to plead not guilty to the charges.
The actions cited by prosecutors took place from 1995 through 1997 and began with the issuance to Pace and his associates of cheap "founders" stock in companies about to go public in offerings underwritten by VTR Capital and Investors Associates. Prosecutors say that before the offerings, Pace and his colleagues agreed to sell their shares to the underwriters at prearranged prices, resulting in substantial profits to the insiders. Then shares in the companies were sold to the public by brokers using abusive sales practices, such as misrepresenting facts about the companies and their prospects to pump up demand for the stock. This created illegal profits for the firms selling the shares. Most of the companies' share prices subsequently collapsed.
The companies whose shares were underwritten by VTR Capital and Investors Associates were Interiors Inc., a company that made picture frames; Compare Generiks, a distributor of over-the-counter drugs; Perry's Majestic Beer, a brewer; Decor Group, a maker of sculptures, and Superior Supplements, a manufacturer of dietary supplements.
Also named in yesterday's indictment were Warren Schreiber, 43, a former broker with VTR Capital; Vincent Grieco, 33, co-manager of the Melville, N.Y., office of Investors Associates; Judah Wernick, 35, a principal of Patterson Travis, a brokerage firm with offices in New York; Robert Landau, 57, an investor in three of the offerings, and Nancy Shalek, 44, chairman of three of the companies. VTR Capital and Investors Associates were charged, as well.
Co-conspirators named in the indictment were Lawrence Penna, 55, the former president and chief executive of Investors Associates; Herman Epstein, 58, compliance director of the firm, and Douglas Mangan, 37, a former supervisor at the firm's Melville, N.Y., branch. Phone calls to Schreiber, Ms. Shalek and Landau and Novich were not returned last night. The others could not be reached. ...
The full article can be found at: nytimes.com
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