NYPOST.COM : HE OUGHTA KNOW By AARON ELSTEIN
March 23, 2003 -- Stockbrokers usually pay fines or serve jail time as
punishment for bilking their customers. But David Gahary can't afford to pay
his fines, so he's trying to raise cash by trashing Wall Street on the air
as a radio host.
Gahary, who was barred from the brokerage business last year and ordered to
pay more than $500,000 in fines and restitution for
embezzling customer funds, said he hopes to make it big in radio by clueing
listeners in to how Wall Street "really works." His show,
called "On the Corner of Wall and Fraud," is broadcast every Monday morning
at 8:30 on WBAI, 99.5 FM.
He claimed he wants to expose how Wall Street "is a manipulative system that
is systematically rigged against the little guy."
Gahary, a 42-year-old resident of Neptune, N.J., acknowledges cheating his
customers out of thousands of dollars, but inists his fraud was minor
compared to the big Wall Street firms that "fleeced" investors
by selling stocks their analysts knew privately were suspect.
Gahary knows Wall Street and fraud from the inside. After selling
insurance at Prudential Insurance Co. and peddling mutual funds and
annuities for a couple of smaller firms in the mid-1990s, in 1998 Gahary
raised about $300,000 for a company called Skynet Industries Inc., of which
he was vice president and his younger brother, Darius Ghahary (David dropped
the "h," after the "G" in the spelling of the name), was president.
The brothers deposited the cash in an E*Trade account and bought options in
stocks like Dell Computer and Applied Materials, Gahary said.
Skynet investors lost everything, Gahary acknowledged, but he pocketed
more than $20,000 of the money they raised, according to a New Jersey
Bureau of Securities lawsuit. Gahary used the cash to pay $9,200 worth of
rent, $7,200 in American Express bills and other personal expenses,
according to New Jersey regulators.
Gahary said he made a "mistake." "I see the radio show as my community
service," he insisted. If the radio gig turns into a lucrative career, he
plans to repay the customers he cheated. Otherwise, he said he can't afford
the fines and restitution he owes.
WBAI isn't paying him for his show, which began last July.
Getting sued by New Jersey regulators wasn't Gahary's only tangle with
market authorities.
In 2000, he was sued by the New York Stock Exchange for impersonating
the NYSE's Chairman Richard Grasso on RagingBull.com, a site where
investors argue about stocks.
Gahary acknowledges using Grasso's name when posting messages, some
of which contained lewd language, claiming he did it as "parody." The suit
was dropped last April after a federal judge ordered it go to trial.
Recent guests on Gahary's radio show include former Securities and
Exchange Commission Chairman Arthur Levitt and Senators Hillary
Clinton and Jon Corzine.
Gahary envisions the program as "being like Charlie Rose, though focusing
purely on Wall Street" and the ways it defrauds people. He's requested
interviews from Warren Buffett and hedge fund manager George Soros.
On his program on March 10, which commemorated the third anniversary
of the Nasdaq Stock Market inflating to its all-time high, Gahary phoned
Harvey Houtkin.
Houtkin, when CEO of a defunct brokerage firm, popularized day trading
in Nasdaq stocks before he was fined and suspended by the National
Association of Securities Dealers two years ago for failing to make clear
that people could lose their shirts by day trading.
Gahary praised Houtkin for "democratizing" the stock market, which he
said "enabled people to get in and make a fortune and lose a fortune."
Gahary and Houtkin are no strangers to ranting on the airwaves. They
reminisced, also on the March 10 program, about when they declared, back in
2000 on another radio show, that Wall Street had "orchestrated a conspiracy"
to cheat the public.
If more people had listened, then perhaps the bear market wouldn't be so
painful now, they both suggested. "We were trying to warn people,"
Houtkin said.
"I think we helped," echoed Gahary. |
