Word has it that Michael Markow got tipped off and escaped the Boiler Room Raid? I am sure it will all come out as the "Honest Business man" and "straight shooter" sues internet posters. His attorney from what I understand called Marcow an "Honest Business Man"? Wonder is he is held in contemp of court?
Go to this arbitration link which is most shocking;
scan.cch.com
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SEC Order Bars 2 From Brokerage Industry Woodland
Hills: Latest action
comes after regulators shut down Brokers Investment
Corp., alleging it was a
huge boiler-room operation. Other former Brokers
Investment personnel have
set up a new firm nearby.
The Los Angeles Times (Pre-1997 Fulltext); Los
Angeles, Calif.; Aug 17, 1993; DON LEE;
Abstract:
It was last year when the SEC initially suspected that
Brokers Investment was violating
securities law. In April the SEC alleged in Los
Angeles federal court that Shubert and
[Daniel H. Steinberg] were running a nationwide scam
in which Brokers Investment, along
with an obscure San Diego firm called U.S. Fiberline
Communications, defrauded investors
of at least $40 million by selling dubious investments
in telecommunications. The SEC said
Brokers' salesmen raised $109 million from 6,000
investors by reading sales scripts that
talked about annual returns of up to 32%, and that $40
million was pocketed or
fraudulently used by Shubert, Steinberg and others.
[William Lawrence], in materials sent to former
clients of Brokers Investment, described
itself as a complete brokerage that deals in mutual
funds, stocks and other investments.
The brokerage was incorporated by Martin W. May in
1991 when he was head of sales
operations at Brokers Investment, papers from the
secretary of state and court
proceedings show. May, 42, is a third defendant in the
SEC's lawsuit against Brokers, and
is currently negotiating a separate settlement with
the SEC, the agency said.
[Raymond H. Niesslein], 37, is a longtime associate of
Steinberg. Niesslein has not been
accused of any wrongdoing by the SEC in the Brokers
Investment case. Before joining
Brokers, he worked with Steinberg at a Canoga Park
brokerage selling oil and gas deals. In
1984, Niesslein and Steinberg were disciplined by
regulators in Wisconsin and California,
and without admitting or denying guilt, they agreed to
stop selling unregistered securities.
Full Text:
(Copyright, The Times Mirror Company; Los Angeles
Times 1993all Rights reserved)
Norman D. Shubert and Daniel H. Steinberg, accused by
the Securities and Exchange Commission in a
complaint filed in federal court last spring of
running a huge boiler-room operation in Woodland
Hills,
have agreed to a federal order that bars them from the
brokerage industry for life.
The SEC order prohibits Shubert and Steinberg, both
Calabasas residents, from "association with any
broker, dealer, municipal securities dealer,
investment adviser or investment company." Shubert,
61, and
Steinberg, 37, signed the administrative order without
admitting or denying guilt, and it took effect July
29.
Steinberg said the cost of fighting the SEC was one
reason he agreed to the ban. "I was left with few
alternatives." Steinberg now works at a memorabilia
business in Tarzana called American Legacy. "I'm
out of the securities industry."
Shubert did not return telephone calls for this story.
The SEC order is the latest, and strongest, regulatory
action against the former owners of now-defunct
Brokers Investment Corp. in Woodland Hills. And it may
have been prompted by reports that Shubert
and Steinberg have been involved with a new brokerage
called William Lawrence Securities, also in
Woodland Hills, which was formed by executives at
Brokers Investment as regulators were closing in
on that firm.
It was last year when the SEC initially suspected that
Brokers Investment was violating securities law.
In April the SEC alleged in Los Angeles federal court
that Shubert and Steinberg were running a
nationwide scam in which Brokers Investment, along
with an obscure San Diego firm called U.S.
Fiberline Communications, defrauded investors of at
least $40 million by selling dubious investments in
telecommunications. The SEC said Brokers' salesmen
raised $109 million from 6,000 investors by
reading sales scripts that talked about annual returns
of up to 32%, and that $40 million was pocketed or
fraudulently used by Shubert, Steinberg and others.
An SEC investigation is still determining how much
money is missing and where it went. Pending that
report, expected by year-end, the defendants could be
forced to make restitution to investors and pay
civil penalties.
In April of this year, Shubert and Steinberg signed an
SEC consent order, without admitting or denying
guilt, promising not to sell unregistered securities
or break any other securities law. And under pressure
from the SEC, Brokers Investment shut down last
spring.
But as Brokers was winding down its business early
this year, William Lawrence was setting up shop in
Woodland Hills, just down the street from where
Brokers once operated in Warner Center. When
William Lawrence opened for business in early spring,
Shubert had an office in the back of that
brokerage.
Although Shubert and Steinberg had no official titles
at William Lawrence, they held a reception for its
opening, and Shubert attended regular meetings at the
new brokerage, according to an internal company
memo and former employees at William Lawrence. The
SEC, when asked about Shubert's presence at
William Lawrence earlier this summer, simply said he
should not be there.
William Lawrence, in materials sent to former clients
of Brokers Investment, described itself as a
complete brokerage that deals in mutual funds, stocks
and other investments. The brokerage was
incorporated by Martin W. May in 1991 when he was head
of sales operations at Brokers Investment,
papers from the secretary of state and court
proceedings show. May, 42, is a third defendant in the
SEC's lawsuit against Brokers, and is currently
negotiating a separate settlement with the SEC, the
agency said.
May was secretary and treasurer at William Lawrence,
but recently resigned from those posts and is
now working as a broker at William Lawrence, said
Raymond H. Niesslein, formerly senior vice
president at Brokers and now president of William
Lawrence.
Niesslein confirmed that former Brokers Investment
personnel made the move to William Lawrence
early this year, taking with them some active accounts
and client lists from Brokers Investment.
Niesslein also said that Shubert had maintained an
office at William Lawrence.
However, Niesslein said in an interview that Shubert
had moved out of William Lawrence's office in
early July and that Shubert now has no involvement
with the brokerage. Asked what Shubert had been
doing at William Lawrence's offices, Niesslein said,
"he had a lot of things he had to wind up, and we
allowed him to lease some office space."
Niesslein added: "We have a lot of old baggage. We're
trying to eliminate it."
It was Shubert who formed Brokers Investment in 1985
as a discount brokerage, and a couple of years
later Steinberg and Niesslein joined him. From 1989 to
mid-1992, Brokers sold mainly limited
partnerships that were supposed to be invested in U.S.
Fiberline's projects.
Niesslein, 37, is a longtime associate of Steinberg.
Niesslein has not been accused of any wrongdoing by
the SEC in the Brokers Investment case. Before joining
Brokers, he worked with Steinberg at a Canoga
Park brokerage selling oil and gas deals. In 1984,
Niesslein and Steinberg were disciplined by regulators
in Wisconsin and California, and without admitting or
denying guilt, they agreed to stop selling
unregistered securities.
But there are signs that regulators are now looking
into activities at William Lawrence, which is selling
some investment deals that were originally designed
and marketed by Brokers Investment.
Complaints have been filed by investors with the
National Assn. of Securities Dealers-a regulatory
group based in Washington-involving William Lawrence.
The NASD typically investigates investor
complaints.
Aaron Rose, a former William Lawrence broker, said a
compliance officer with the NASD last month
questioned him extensively about William Lawrence's
use of sales scripts-or prepared materials that are
read to potential investors.
The NASD declined to comment on whether it was
investigating William Lawrence. But a regional
official at the NASD said it was responding to some
complaints from clients of William Lawrence.
Rose and other former employees at William Lawrence
provided to The Times copies of scripts that
they said were furnished by managers at William
Lawrence. In one set of scripts, designed for a
boat-leasing deal called IBS Financial Partners,
brokers at William Lawrence were told to tell
potential
investors: "IBS is certain that they can place easily,
$4 million per month from April throughout the rest
of 1993 and can double that number in 1994. . . .
Based on these numbers" investors "could have three
times their investment in just two years."
Such scripts, though marked "for training purposes
only," were read verbatim by salesmen, former
William Lawrence employees said. Earlier this month,
Michael Burnett, a Louisville, Ky., businessman
who is an IBS director, confirmed that IBS, which is a
start-up operation, has yet to produce any
revenue. NASD rules strictly prohibit presenting
optimistic or unrealistic forecasts about investments.
Niesslein, the president of William Lawrence,
acknowledged the existence of such sales scripts, but
said
that in the last month he had discarded them and is
instructing brokers at William Lawrence not to read
training materials over the phone. "We know where
Brokers Investment got in trouble and don't want to
repeat their mistakes," Niesslein said.
Finding investors for the IBS partnership was
originally handled by Brokers Investment and then was
marketed by William Lawrence, Niesslein said.
According to the prospectus, IBS, a
Nevada-incorporated business formed partly by Shubert
and Steinberg, signs agreements with boat
manufacturers. In turn, the boat makers agree to lease
boats to people through IBS, for which IBS
receives certain fees. The prospectus, dated in
February, said Shubert and Steinberg are general
partners in IBS, meaning they are part of the
management team and entitled to benefit from the
performance of the business.
Burnett said Shubert and Steinberg resigned as general
partners of the business last spring, although
they remain minority shareholders. But the change has
not yet been recorded with the secretary of
state's office in California, which such partnerships
must do within 30 days of the change. Burnett said
failure to record the management change was an
"oversight" and that it is now being addressed.
Shubert, as recently as June, was also soliciting
money from investors for another deal that Brokers
sold
late last year, according to letters sent out to
potential investors. That deal was designed to raise
more
than $1 million to finance a firm called Berleca USA,
which wanted to market apparel using the
Coca-Cola name under a license agreement with the
beverage company.
According to the prospectus, Berleca is partly owned
by Shubert, and the program is managed by
Sovereign Capital Group of Las Vegas, which is also
owned by Shubert and was the managing partner
of some Fiberline deals. Coca-Cola, based in Atlanta,
declined to comment.
In a letter dated June 8, Shubert told investors that
Berleca was not performing well, and he concluded
by saying: "Should any of you have the ability and the
interest in providing bridge financing to Berleca,
please contact Warner Capital Group, their investment
banker."
State records show Warner Capital is owned by Thomas
Shubert, Norman Shubert's son. Warner
Capital operates in the back end of William Lawrence's
offices.
Niesslein said Thomas Shubert, who also previously
worked at Brokers Investment, was not involved in
any way with William Lawrence. Thomas Shubert refused
to comment.
[Illustration]
PHOTO: Office of William Lawrence Securities, which
opened near Brokers Investment in Woodland Hills. /
Los
Angeles Times; PHOTO: Daniel H. Steinberg and Norman
D. Shubert, former owners of now-defunct Brokers
Investment Corp., pictured on VICA magazine cover.
Sub Title:
[Valley Edition]
Start Page:
4
ISSN:
04583035 |
