SEC Asks Court to Find Reid in Contempt

The Securities and Exchange Commission asked a federal judge Thursday to find Thomas W. Reid in contempt of court for failing to pay more than $150,000 to brokerage firms that he allegedly defrauded in a stock manipulation scheme.

In papers filed in federal court here, the SEC asked U.S. District Judge John F. Keenan to sentence Reid to a conditional jail term to force him to comply with the restitution agreements and other promises that he made March 1, when he settled the SEC’s fraud charges against him without admitting or denying them. Keenan is expected to rule soon.

The SEC on Feb. 11 charged Reid and four other men with placing orders for thousands of shares of stock in First City Properties, a Los Angeles investment firm controlled by the Belzberg family of Vancouver, without planning to pay for the orders. The maneuver, known as “free riding,” is a form of illegal stock manipulation.

Unsuccessful in Collecting

In settling the SEC’s case, Reid agreed to pay $35,000 to E. F. Hutton & Co. and $124,700 to City Securities Co., an Indianapolis brokerage firm, within three weeks of the settlement. To guarantee the agreement, he gave the SEC liens on his $1.6-million, 400-acre horse-breeding ranch near Dallas and on a $2.5-million powerboat.

Affidavits from officials of both firms filed with the contempt motion say that neither has been successful in collecting the funds.

The SEC also contends that Reid lied when he said there were no existing liens on the ranch except for $1.1 million in mortgages. In fact, the SEC says, he is prohibited from encumbering the ranch under an October, 1984, judgment against him in a New Jersey paternity case.

Reid apparently made as much as $40 million from stock investments in Southland Royalty Corp., a Fort Worth oil company, and other companies in the 1970s and early 1980s. More recently, his financial affairs have been clouded. An Aug. 6, 1984, financial statement filed in court by the SEC places his net worth at $10.4 million and lists $19.7 million in assets, including $11.9 million in marketable securities. Liabilities include $8.9 million in bank and brokerage loans.

But in documents filed in the New Jersey paternity suit Oct. 30, Reid listed assets of $6.5 million and liabilities of $11.4 million--in short, debts worth $4.9 million.