ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, October 12, 1996 TAG: 9610140046
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
AT LEAST FOUR OF THE 45 charged have prior convictions ranging from murder and robbery to tax evasion.
A convicted murderer, a drug dealer and a tax cheat are among the 45 stock brokers and promoters caught in a federal sting, according to law enforcement sources and documents obtained by The Associated Press.
The sting is the latest evidence that Wall Street and its regulators have yet to eradicate a hard-core element of repeat offenders from its ranks.
The U.S. Attorney's Office in Manhattan on Thursday announced it was bringing criminal charges ranging from securities fraud to criminal contempt against a range of stock promoters and brokers who made illegal payments to a brokerage house staffed by undercover FBI agents.
The undercover agents posed as unscrupulous brokers who were willing to accept payoffs in cash or stock to sell stocks in little-known companies, many of which aren't even traded on regular stock markets. Also participating in the case was the Securities and Exchange Commission and the National Association of Securities Dealers Inc., a self-policing arm for brokers. The securities regulators brought their own, separate civil charges against 28 of the individuals.
Brokerage industry records and interviews with regulators indicate at least four of those charged have prior criminal convictions ranging from murder and robbery to tax evasion. In addition, they show that an equal number previously had been barred by stock market regulators from working as stock brokers, either permanently or temporarily.
``For whatever reason, the regulators can't seem to drive them out of the business,'' Richard Roberts, a former SEC commissioner, lamented Friday in reference to recidivist brokers. Roberts said although the majority of brokers are honest and professional, there's a hardened element of ``less than 10 percent'' who continually get into trouble.
Among those charged is Edward Williamson, 49, of Wichita, Kan., who was convicted of murder and robbery on Oct. 16, 1969, according to the SEC and NASD. The regulators said Williamson was paroled in 1971.
Williamson, who was not listed in Wichita telephone books, faces both criminal and civil securities fraud charges, but he had not yet been arrested on the criminal charge of making an undisclosed payment of $4,375 to a brokerage firm on Oct. 1, for earlier purchases of OMAP Holdings Inc. stock.
All stock brokers must be licensed by the NASD after undergoing a series of tests. Convicted felons can become licensed brokers, but they must wait 10 years after a felony conviction to reapply. The NASD and states that license brokers consider character as a factor in deciding who gets licensed.
But just because a broker has been barred doesn't prevent that person from working on Wall Street's fringes, said John Coffee Jr., a securities law expert at Columbia Law School in New York.
Coffee cited cases where former brokers ``step one inch outside that line'' of being a legally licensed securities professional by claiming they are promoters or consultants. Those jobs don't require licenses.
Stock promoters try to encourage brokerage firms and others, including individuals, to buy a particular company's securities.
Williamson was a promoter when he was charged Thursday.
The convicted drug dealer charged in the case is Andrew Scudiero, 35, of New York, who pleaded guilty to a federal drug distribution charge in 1986. The NASD suspended him for seven months in January 1993, for dealing with customers without a license and unauthorized trading. He couldn't be reached for comment.
Another convicted felon facing new charges is Joseph V. Pignatiello, 50, of Coral Springs, Fla., who had previously been barred from brokering stocks. According to SEC and NASD, he pleaded guilty in April 1986 to one count each of conspiracy and failure to file a 1981 tax return. He was fined $35,000 and sentenced to two years in prison. After his release from prison, the SEC ordered him to repay $100,000 in illegal profits from the scheme.
The NASD barred Pignatiello from the securities industry in March 1985, and the SEC followed suit in 1987. The SEC has a pending complaint against him alleging insider trading in a Colorado case called SEC vs. Power Securities Corp.
LENGTH: Medium: 78 linesby CNB