FBI Agents raid magnet firm in Newtown
Agents raid magnet firm in Newtown
YBM Magnex does business in Russia and Ukraine. It manufactures
magnets for industry and consumer goods. Trading in its stock was
suspended.
By Richard V. Sabatini
and Lacy McCrary
INQUIRER STAFF WRITERS
NEWTOWN TOWNSHIP --Dozens of federal agents raided YBM Magnex
International Inc. yesterday, seizing records and interviewing employees
of the company, which manufactures high-energy permanent magnets
used in industry and in consumer goods, including electronics. YBM does
three-quarters of its business in Russia and the Ukraine.
A law enforcement official said the search was conducted by about 60
federal agents in connection with an investigation into allegations of
money-laundering, securities fraud and customs and immigration
violations.
It was not clear what role, if any, the company played in what was
alleged, and there were no arrests made yesterday. The official said a
70-page affidavit accompanied the request for a search warrant.
Both the affidavit and the warrant were placed under court seal and
were not available for inspection.
Michael Stiles, the U.S. attorney in Philadelphia, declined to comment on
the search yesterday, except to say that a federal warrant had been
executed. He would not say whether the company itself is under
investigation.
Special Agent Linda Vizi, the FBI spokeswoman in Philadelphia, also
refused comment, saying that any documents supporting the raid were sealed by the court.
Company officials meeting inside the plant last night would say nothing.
Through a police intermediary, they referred all questions to the U.S.
Attorney's Office. At 10:53 a.m. --less than a half hour after the raid
began --trading on the Canadian company's stock was suspended on
the Toronto Stock Exchange with the notation "pending news."
At the time the suspension was announced, YBM was trading at $14.35, up 85 cents from Tuesday.
The company, with a manufacturing location in Elizabethtown, Ky., and a
fully automated plant in Budapest, Hungary, had net sales of $190.8
million last year. Its location here is its worldwide
headquarters.
The agents conducting the raid were from the FBI, the U.S. Customs
Service, the U.S. Immigration and Naturalization Service, the IRS and the State Department.
They surrounded the building with the aid of local police at 10:30 a.m.
Officers were seen backing up a large Ryder rental truck to the
company's loading dock and unloading bundles of ready-to-assemble
corrugated boxes.
Newtown Township Police officers, who accompanied the federal
authorities, stood guard at all entrances and allowed no one into or out of the building.
At a meeting of the Newtown Township Board of Supervisors last night,
Chairman Steve Sanderlin acknowledged the raid and said that any
questions should be directed to to the U.S. Attorney's Office.
YBM Magnex was on the supervisors' agenda for a proposed expansion
to its facility. Two architects from the Robert E. Lamb Co., appearing on
behalf of YBM, said they knew nothing about yesterday's developments until Sanderlin's announcement.
The architects and the real-estate attorney Peter S. Friedman,
representing YBM, appeared before the board to request approval for a 31,000-square-foot addition to the YBM building in Newtown Township.
"We are here to seek approval for a plan that's been pending since late
last year," Friedman said. "We don't have any information about what
happened there today. We were very taken by surprise. This was not on the program for tonight."
The company's stock had fallen 14 percent Monday to $14.60 a share in
Toronto trading, after the magnet maker sought a 45-day extension on
filing its 1997 financial statements because its
auditor had requested more data.
It dropped again Tuesday after analyst Peter Sklar of Nesbitt Burns
downgraded his rating of the stock to "hold" from "buy."
In the brief period from the time the exchange opened at 9:30 a.m.
yesterday until trading was suspended, 1.1 million shares of YBM were traded.
The stock's average daily trading over the last six months was only
131,000 shares. The Bloomberg News Service reported on Monday that
an unnamed company spokesman said auditors wanted to look at more data regarding the company's use of bartering.
Referring to the countries where YBM does most of its business,
Bloomberg quoted the spokesman as saying, "Most of these countries
work on a bartering economy. It's normal practice in Russia and the
Ukraine."
Many companies in Eastern Europe do not have enough cash and cannot
afford to borrow any, so they often pay for goods by barter.
YBM Magnex sometimes sells goods and obtains supplies by trading
through middlemen, who keep 5 to 10 percent of the value of the barter transaction, the spokesman told Bloomberg.
YBM Magnex Inc. bought the 31,265-square-foot office building on six
acres at 110 Terry Dr. from Newt Associated Ltd. for $2.4 million last
year.
YBM had leased the building since 1995. It employs about 40 workers.
According to Nelson's Company Profiles, YBM's chief executive officer is
Jacob G. Bogatin, 51. Its chief operating officer is Igor Fishermann, 46,
and Daniel E. Gatti, 35, is the chief financial officer. Harry W. Antes, 68,
is listed by Nelson's as chairman of the board. He is a former vice
president for research and development at SPS Technologies in
Jenkintown.
The company on its Web page said its magnets were used in a wide
range of industrial applications and consumer goods, including fax
machines, personal computers, electric motors, automobiles and medical equipment.
The company claims to be the second-leading producer of permanent
magnetic materials in the United States.
Also contributing to this report were Inquirer staff writer Jeff Brown,
correspondents Lisa Shafer and Patricia La Hay, and the Bloomberg
News Service
|
