nj.com Wegard brokers found guilty
Jury convicts pair of 13 fraud counts
11/12/99
By John T. Ward
STAFF WRITER
Two stockbrokers alleged to have worked at the retailing end of a massive share-manipulation scheme run by Robert E. Brennan were found guilty of fraud yesterday.
After five days of deliberations, a federal jury in Newark found Victor Samaha, 32, and Joseph Orlando, 31, guilty of all but one of the combined 14 counts against them.
Orlando was acquitted of a single count of unauthorized trading in a customer's account, but convicted of fraud conspiracy and omitting material facts about high-risk stocks when he sold them to customers.
Samaha was found guilty of conspiracy, five counts of giving other brokers sales scripts that left out risk information, and one count of creating a misleading customer account form.
After the jury gave its verdict, Orlando, a burly former college football player, rocked in his seat, teary-eyed, holding his head, as a woman who accompanied him sobbed aloud.
"You don't deserve to go to jail," she said as she hugged him after the proceeding before U.S. District Judge William G. Bassler. "It's just not right."
Samaha was less visibly affected. "I feel I got a bad deal," he said.
Lawyers for the two said they would consider filing appeals.
Orlando, of Pittsburgh, and Samaha, of Providence, R.I., were the last of 17 brokers from New York-based L.C. Wegard & Co. who were indicted by a federal grand jury for illegal stock sales after the eight-branch firm collapsed in 1995.
Of those charged under two indictments, 14 pleaded guilty. The remaining broker was dropped from the case because of health problems. Samaha and Orlando are to be sentenced Feb. 7. No sentencing dates have been set for the other defendants.
Brennan, who commanded headlines throughout the 1980s as a philanthropist, racetrack owner and often-sued promoter of penny stocks, was not charged in the case, and has never faced criminal charges.
But in a related matter, the New Jersey Bureau of Securities sued him in 1995, alleging he got secret control of the Wegard firm -- formerly a one-office brokerage in Bedminster owned by husband and wife Victor and Lillian Wegard -- and transformed it into an engine of massive frauds.
The frauds involved control and manipulation of stock in little-known companies, and "boiler-room" telephone sales campaigns that often involved high pressure pitches and deceit by brokers, the state alleged.
Brennan settled the suit in June without admitting to any wrongdoing, and agreed to pay the state a total of $100 million, though he was credited for $55 million as a result of a deal between the state and the trustee for his bankrupt business empire. Brennan, a Newark native who lives in Juno Beach, Fla., is liable for the remaining $45 million under the deal.
Samaha was assistant manager in Wegard's Providence office, and Orlando was a broker in the firm's Monroeville, Pa., branch. He and Samaha did not know each other and never met until after they'd been indicted, their lawyers said.
During the seven-week trial, John Webster, Samaha's lawyer, attempted to pin responsibility for the frauds on a circle of unindicted players, including Brennan and Wegard owner Leonard B. Greer. After Bassler prohibited Samaha's so-called "Brennan conspiracy" defense, Webster attacked other upper-echelon employees at Wegard.
Brennan said recently that he did not know either Samaha or Orlando. He also predicted that his settlement with the state boded well for the pair in their case, because it showed that the government was unable to prove any fraud or conspiracy existed.
"I would suspect it would provide some confidence to the defendants in this case," Brennan said in September. "There were no findings of any violations or wrongdoing, despite the provocative nature of the allegations."
Orlando's lawyer, John C. Whipple of Morristown, did not mention either Brennan or Greer. But he laid blame for whatever crimes occurred on the brokers who admitted to frauds and other Wegard officials, including a branch manager who was not charged.
Orlando "was molded into exactly what the criminal conspirators wanted him to be," Whipple said at the start of the trial. "Joseph Orlando had no criminal intent. He did the job he was trained to do."
Prosecutors said they never alleged that Samaha and Orlando were masterminds of the conspiracy, but rather were "enthusiastic participants" in the fraud. The government "recognizes that (a Brennan) conspiracy may have existed," they said in court papers, but contended that was irrelevant to the broker case.
"We're pleased with the verdict, and feel the evidence supported it," Assistant U.S. Attorney David A. Rosenfield said as he left the courtroom yesterday.
Jurors in the trial declined comment on the case. |
