FBI, Politicians, Reputed Mobsters Touched by Storm : Commodity ‘Genius’ at Center of Furor

On a winter morning early this year, Mayor Tom Bradley was called to a closed-door meeting in the 20th-floor Westwood offices of Mark Ross Weinberg, a troubled young commodities trader. Two FBI agents also were there.

Bradley and the young financier were friends. In fact, Weinberg, now 31, says he was a friend of many politicians. He contributed heavily both to the mayor’s and Dist. Atty. Ira Reiner’s successful election campaigns. He also had hosted fund-raisers for Walter F. Mondale, former Gov. James B. Hunt of North Carolina and U.S. Sens. Alan Cranston of California and Bill Bradley of New Jersey.

The mayor even invested personal funds with Weinberg and acknowledges he earned a profit of about $40,000 before closing his commodity account a short time before the meeting. But the startling news of that winter meeting in Weinberg’s office was that in addition to Bradley and other prominent investors--among them other political figures, FBI agents, Secret Service agents, judges, bankers and Bradley’s Police Department bodyguards--Weinberg’s list of clients also included several individuals with mob ties.

More Bad News

More bad news came later as angry investors--saying they were attracted by Weinberg’s association with political leaders like Bradley--began filing lawsuits accusing Weinberg of fraud and deceit. Suits filed in Los Angeles, Nevada, Illinois, New York and Florida allege that losses stemming from a series of 1984 investments with Weinberg could exceed $10 million. No criminal complaints have been filed.

And in September federal commodity market regulators, investigating some of the complaints, imposed heavy restrictions on Weinberg’s trading activities after he refused to disclose financial records to the National Futures Assn. in Chicago.

Now, law enforcement sources have told The Times that Weinberg, while he was handling commodity trades for client politicians, federal agents and reputed mobsters, also was working as a confidential source for the FBI’s organized crime unit in Los Angeles.

In that capacity, according to the law enforcement sources and others close to the investigation, Weinberg permitted conversations in his office and over his telephones to be recorded by the FBI, he once wore an FBI taping device while passing a $7,000 payment to the friend of a judge in Las Vegas and he turned over to the government records of his business transactions with reputed mobsters and their associates.

Weinberg would neither confirm nor deny that he was a confidential source for the FBI or any other government agency. “I don’t want to get whacked,” he said.

Status Disclosed to Bradley

Mayor Bradley, through a spokesman, said Weinberg’s status as a confidential source for the FBI was disclosed to Bradley by the two FBI agents he met that winter morning in Weinberg’s office.

Despite his apparently favorable relationship with West Coast FBI agents, The Times has learned, Weinberg is the subject of a criminal investigation by the FBI in New York. Furthermore, the Justice Department is conducting an administrative investigation of federal agents whose investment accounts Weinberg has managed over the last three years.

Weinberg blames his financial and legal difficulties on shadowy East Coast figures, some of whom he says “looted my accounts.”

The Times has examined financial documents showing that among Weinberg’s business associates in 1984 were Matthew (Matty the Horse) Ianniello, a reputed underboss in the New York mob who went on trial earlier this week in Manhattan on racketeering charges; Milton Parness of New Jersey, a convicted racketeer who was released from federal prison in 1980, and Robert Amira, a former Las Vegas casino executive who was among 32 men indicted in New Jersey last July in connection with an alleged conspiracy to defraud Atlantic City casinos.

Like some of his clients, Weinberg said he also was a victim of substantial losses, mostly in 1984. He said he lost millions of dollars to the mob and to bad trades.

‘I’m No Thief’

“I may be a schmuck, but I’m no thief,” he said, challenging assertions in court documents that investor funds were improperly diverted.

Weinberg said his $1.1-million Beverly Hills home is in foreclosure and that restrictions imposed by commodity market regulators have frozen much of his income. Earlier this year he lost his share in a $2.5-million executive jet.

“I’m tapped out,” he said. “There’s no question that money’s missing, but I don’t have it. If I did, I wouldn’t be in foreclosure. . . . I wouldn’t be in this mess.”

The mystery-shrouded affairs of Mark Ross Weinberg raise many puzzling questions. For example:

- Did the FBI set loose in Weinberg a naive “junior G-man” whose possibly inept attempt to be helpful to agents investigating reputed organized crime figures resulted in innocent investors suffering substantial losses?

- Or, did Weinberg attempt to conduct an old-fashioned “ponzi scheme” (using one investor’s money to pay off another) under the protective cover of an FBI-sanctioned bid to penetrate mob financial circles?

- Was Weinberg a victim or a perpetrator?

Two years ago Weinberg, not yet 30 years old and regarded by some of his investment clients as a “boy genius” of the commodity markets, gave every appearance of consummate success--traveling in limousines and a private jet and throwing lavish black-tie parties for clients and politicians.

Charles Manatt, former chairman of the Democratic National Committee and an investment client of Weinberg’s, was a passenger aboard the Weinberg jet on a number of occasions, for example. The jet also was used on campaign trips by Mayor Bradley and former North Carolina Gov. Hunt. And in the fall of 1983, former California Gov. Edmund G. Brown Jr. flew with Weinberg to Washington for the Democratic Party unity dinner.

When Chicago investor Moshe Shaltiel brought his family to the La Costa resort near San Diego early this year, Weinberg gave him the jet for a daylong sightseeing tour of Nevada, Arizona and Southern California.

‘Was Very Impressed’

“I was very impressed. He had an airplane, limousines, a shoe box full of letters from senators and congressmen . . . and he was only 31 years old,” Shaltiel, vice president of a Chicago securities firm, said in a telephone interview.

“Everybody knew him. Mark said if I wanted to check him out, I should call his friend, Mayor Bradley. He showed me the mayor’s account. . . . He gave me his phone number and everything,” added Shaltiel, who named Weinberg in a $1.6-million suit he filed against the New York brokerage firm of E. F. Hutton and Co.

In Shaltiel’s case, as in others detailed in court documents in four states, the investment scheme that allegedly went bad involved the marketing of thousands of silver futures options. The court documents say Weinberg told investors he had an option to buy “put contracts” that guaranteed a sale price of $10 an ounce on silver bullion, the documents say, and potential investors were given oral and written assurances by officials of major brokerage houses that the contracts were valid.

What Weinberg needed, the investors say, was cash to exercise the options--to purchase the silver at a market price of about $7 an ounce--after which he would sell the silver under terms of the put contract for a “guaranteed,” instant profit of about $3 an ounce.

According to court records, those profits were guaranteed by E. F. Hutton and the brokerage firm of Drexel Burnham Lambert, both of which have been named in suits alleging negligence, racketeering, fraud and conspiracy. Officials for Drexel Burnham Lambert refused to comment. E. F. Hutton attorneys, in formal responses to some of the complaints, denied liability and asserted that any guarantees allegedly made by its executives were “outside the course and scope” of their authority.

Account Executives Fired

Two account executives who handled Weinberg investments, one at E. F. Hutton headquarters in New York and one at Drexel Burnham Lambert’s Los Angeles office, have been fired in the aftermath of the complaints, however.

In the suits filed so far, various clients contend that they gave Weinberg a total of about $15 million but that only about $4 million has been repaid.

One suit filed by Pomona eye surgeon Albert N. Monterastelli contends he bought silver options that would have been worth $774,888. But Monterastelli accuses Weinberg and Drexel Burnham Lambert of failing to deliver the options. Monterastelli’s suit says he invested $450,000.

Other individual suits naming Weinberg, E. F. Hutton and Drexel Burnham Lambert range in size from $42,000 to $2 million, including one filed by Bay Area inventor Peter G. LaHaye who says he lost more than $1 million. LaHaye was Weinberg’s partner in ownership of the executive jet and “a good friend” until financial disputes divided them.

But what happened to all the money?

Plaintiffs’ attorneys tracing their clients’ checks and wire fund transfers--with the aid of a central computer in a Chicago law office--contend that LaHaye’s $1-million payment to Weinberg, for example, was broken up and dispersed to two earlier investors in New York and Florida.

Weinberg said one of his unidentified “wise guy”--mob-linked--clients in the East is responsible. Weinberg said the man recruited investors for him from among his East Coast associates.

Bad Timing Cited

“But this guy sold the same silver puts over and over again--I don’t know how many times,” Weinberg said. “I couldn’t tell him to stop. You don’t tell those guys anything. All I could do was try to trade myself out of the mess. Unfortunately, the market went bad at the same time. I made some bad trades. The timing couldn’t have been worse.”

Weinberg traces his financial collapse to a series of curious--and, for Weinberg, costly--check exchanges with Parness and his New Jersey business associates that caused the Beverly Hills branch of Wells Fargo Bank to bounce several hundred thousand dollars worth of Weinberg’s checks.

Financial documents examined by The Times revealed, for example, that during a 30-day period in October and November, 1984, four checks totaling $785,000 and payable to Weinberg bounced. The names on the checks were convicted swindler Parness and Allan Ajamian, Parness’ business associate in a luxury condominium project on the Hudson River. The checks were returned for insufficient funds--but not before they apparently were held by a New Jersey bank for 12 to 30 days, during which time Weinberg apparently issued his own checks on funds that never reached his account. Subsequently, Weinberg’s checks bounced as well.

Parness did not respond to a request for an interview. Ajamian, reached at Parness’ office, said he could not say whether the checks were ever made good. He also said he was unaware that Weinberg was an FBI source.

Bank Officials Informed

The Times has learned that FBI agents shortly thereafter met with top corporate officials of Weinberg’s Beverly Hills bank to tell them that he was acting as a confidential source in an investigation of organized crime activities.

The origins and extent of Weinberg’s role as a confidential FBI source remain somewhat murky, but it apparently began late in 1983. Weinberg acknowledges that at the time he was managing the investments of several active and retired FBI agents.

Sources close to the investigation say that, in subsequent months, Weinberg succeeded in making business contacts with Ianniello, meeting with him at least once at his Hollywood, Fla., home and once flying Ianniello to California aboard Weinberg’s private jet.

On separate occasions Los Angeles-based FBI agents accompanied Weinberg to New York and Las Vegas, sometimes as passengers aboard the Weinberg jet.

By late summer 1984, documents show, Weinberg was handling hundreds of thousands of dollars in commodity investments for Ianniello, Parness and clients referred by them. But Weinberg also was handling the investments of many businessmen unrelated to the reputed mobsters. Eventually, he says, some of that money was lost to the reputed mobsters.

“I’m going to pay it all back,” he insists.

But there is considerable skepticism among disgruntled former investment clients regarding both the prospects of voluntary repayment of their losses and Weinberg’s claim that he is a victim of a mob swindle--what he called “a wise-guy (mobster) ponzi scheme.”

Concern for ‘Political Clout’

“A lot of us lost money, but you can rest assured that none of (Weinberg’s) political clients did,” scoffed one former investor who agreed to be interviewed on condition that he not be quoted by name. He also expressed concern about Weinberg’s “political clout” in Southern California where the investor’s suit is filed and where complaints against Weinberg have been lodged, specifically noting Weinberg’s relationship with Dist. Atty. Reiner.

Weinberg was Reiner’s largest campaign contributor and the district attorney has been a guest at Weinberg’s parties.

A spokesman for Reiner told The Times that the district attorney has referred complaints about Weinberg to the FBI and state attorney general’s office for possible investigation there to “avoid any appearance of a conflict.” Reiner said he did not invest in any Weinberg- managed commodity accounts.

And Weinberg denied that any prominent investors got special treatment. “That’s a quick way to lose your license,” he said.

Weinberg’s license to trade remains under review, officials confirmed, in ongoing investigations by the National Futures Assn. and the federal Commodities Futures Trading Commission. An E. F. Hutton vice president who handled Weinberg’s accounts in New York was scheduled to testify at a closed-door investigative hearing earlier this week.

Grand Jury Considered

Meanwhile, Justice Department officials in New York were considering going before a grand jury with allegations against Weinberg. Sources familiar with the case said FBI investigators in New York and New Jersey had recommended prosecution.

Attorneys for investors who are suing Weinberg say they have been interviewed by East Coast FBI agents investigating Weinberg’s financial dealings. One of these attorneys, who asked not to be identified, said investigators told him that Los Angeles-based agents have argued against prosecuting Weinberg. An FBI spokesman in Washington flatly denied that any disagreement exists.

Phillip Vitello, a Fort Lauderdale attorney representing the off-shore investment firm Kafir Investments that is suing Weinberg in connection with the silver futures options deals, said the FBI may be liable for damages to innocent investors.

“Maybe Weinberg did get involved with shady people; maybe he had to hurt innocent people to keep from being killed--(the mob) does have methods of collection that are superior to the courts’--but I tell you, I hope it’s true (that Weinberg was working with the FBI), because if it is, then the FBI’s going to help pay back my client,” Vitello said in a telephone interview.

Though his business is sharply curtailed, Weinberg continues to conduct his trading business from his office overlooking Westwood Village and UCLA. It is a business he has pursued since he wrote his first successful commodity contract as a 17-year-old student at Beverly Hills High School.

Dropped Out of School

He dropped out in his senior year to trade full time. He said he was unable to continue trading during school hours after school officials ordered him to stop wearing his paging beeper to class in 1972.

Weinberg still gets up at dawn to follow Eastern market developments posted on the blinking amber screens of computers in his home and office. The flamboyant entrepreneur--who says in past years it was not uncommon for him to make, or lose, a million dollars in a morning--often works all day unshaven, wearing jeans and jogging shoes.

His office has the look of a teen-ager’s room--a portrait of Howdy Doody dominating the reception area and comical, life-sized dolls propped up around the rooms. The voice of Woody Woodpecker singing over the telephone answering machine greets callers who reach the office after business hours.

However, recent additions to the office are less amusing. Heavy security bars have been installed between the reception area and the now triple-bolted front door, for example. Weinberg said they were put in after federal authorities notified him that in secret government wiretaps “back East” threats against him were overheard.

Shrugging at the visible mix of security devices among whimsical decor Weinberg said: “We used to have a lot of fun around here.”

Also contributing to this story were Times staff writers Ronald J. Ostrow in Washington, Bill Boyarsky in Oakland and Frank Clifford in Los Angeles, and research assistants Wendy Leopold in Chicago and Susanna Shuster in Los Angeles.