Temple City Man Held in Capsule Poisoning : FBI Says Ex-Brokerage Trainee Hoped to Profit From Scheme to Manipulate Drug Firm’s Stock
A former trainee for an investment brokerage in San Marino has been arrested at Los Angeles International Airport on suspicion of spiking Contac and other over-the-counter drug capsules with rat poison in a scheme to profit on the manufacturer’s stock, the FBI reported Friday.
Edward Arlen Marks, a 24-year-old Temple City resident who has served prison sentences for receiving stolen property and theft, is the first person to be charged in the string of drug-tampering cases across the nation that have claimed at least nine lives since 1982.
No one was believed to have been injured in the tampering case involving Marks. Federal drug officials said the poison he is suspected of placing in 10 Contac, Teldrin and Dietac capsules found in Orlando, Fla., and Houston on March 19 and 20 was strong enough to sicken, but not kill, anyone who swallowed them.
Investigators said that Marks--who is believed to have acted alone--was linked to the case by a fingerprint lifted from a capsule found in Orlando and through suspicions raised by his “unusual” purchases of options for stock in SmithKline Beckman Corp., manufacturers of the drugs.
The investigators said the major breakthrough came when three workers at the Merrill Lynch Pierce Fenner & Smith Inc. office in San Marino identified a voice on a recording of a threatening phone call as that of Marks.
The FBI said Marks was arrested without incident about 8:45 p.m. Thursday as he walked to his car at an airport parking lot after returning here on a People Express flight from Boston, where he was born. Neighbors in Temple City said he had been away for about two weeks.
Marks was arraigned Friday afternoon at the U.S. Courthouse in Los Angeles on one count of tampering with consumer products, a charge that carries a maximum penalty of 10 years in prison and a $50,000 fine. The slightly built suspect stood silently in a blue-gray striped shirt, blue denim pants and dirty white sneakers as U.S. Magistrate James W. McMahon denied him bail and ordered his immediate transfer to Orlando.
At a press conference here Friday morning, Richard T. Bretzing, head of the FBI’s Los Angeles office, said that between March 19 and 21, a man identifying himself only as “Gary” telephoned SmithKline Beckman offices and numerous news media, indicating that tainted capsules could be found at retail outlets in Orlando and Houston. Agents said Marks was trying to induce the company to withdraw the products from sale as p1634890784SmithKline Beckman stock.
Discovery of the tainted capsules in Orlando and Houston prompted an $8-million recall of the three products, and a $900,000 reward for the poisoner was offered by the Proprietary Assn., a drug manufacturers’ group.
After the reward was posted, a man called a Philadelphia television station to warn: “This is Gary. Your $900,000 isn’t enough. I’ll take more.”
As the FBI investigation continued, Marks’ fingerprint reportedly was found on a Teldrin capsule in Orlando.
Not long afterward, agents checking SmithKline Beckman stock transactions nationwide were told by Pacific Stock Exchange sources that an unusually large number of “put” options on the Beckman stock--a total of 360--had been placed by Marks on March 18 and 19.
Through such options, an investor can make substantial profits if the value of a stock drops. The options are popular because they give the purchaser control over a large block of stock for as little as pennies a share, a fraction of the price of the stock itself.
Each “put” gives the purchaser the right--but not the obligation--to sell 100 shares of a particular stock at a particular price on a particular date. For example, someone who bought one “March 85 put option” for the stock on March 18 obtained the right to sell 100 shares at $85 a share by the end of the month.
Could Have Profited
Marks is believed to have purchased his options on $3.1 million worth of stock for a total of about $2,250, apparently thinking that the drug recall would cause the value of the stock to drop quickly. Had the stock, which then stood at $86.50 a share, fallen to $76.50, for example, he stood to make a profit of $364,000.
Despite the recall, however, the stock’s value actually rose during the time Marks held the options, and investigators said he apparently realized no profit from his scheme.
The identification of Mark’s voice by Paul Clause, John Moran and Stephen Garrett at the Merrill Lynch office in San Marino convinced agents that they were after the right man.
Merrill Lynch employees said Marks had worked for the firm for about 2 1/2 weeks last fall before being fired for “unsatisfactory performance.” They gave no further details, except that they had not been able to verify background information that Marks had listed on his job application.
Court records show that Marks was arrested by Monrovia police on Aug. 3, 1983, on suspicion of receiving personal checks that had been stolen. The records indicate that at the time of his arrest, Marks was carrying numerous bogus identification cards and had seven felony warrants pending against him in Massachusetts and four traffic warrants in California.
Sentenced to Prison
Two weeks later, Marks pleaded guilty to two counts of receiving stolen property and subsequently was sentenced to 16 months in prison.
The records state that Marks was paroled by the California Department of Corrections in May, 1984. In June, 1984, he was arrested by police in Massachusetts on suspicion of theft and was sentenced to prison there.
Further investigation by the FBI revealed that while Marks had listed a friend’s home in Arcadia as his residence when he applied for a driver’s license, he was living under the name of John Ellison in a modest apartment in the 6000 block of Temple City Boulevard in Temple City.
Neighbors at his apartment complex described Marks as a generally quiet, unassuming man who moved in about May 1, paying $525 a month for his one-bedroom unit. They said he kept to himself and attracted little notice--except for the unusual hours he kept.
“That part was really peculiar,” said Mitchell Mousian, 52, whose first-floor apartment is directly under Marks’ and whose current unemployment permitted him to keep close track of the man upstairs.
‘Take Off About 11'
“He’d sleep all day, then take off at about 11 at night,” Mousian said. “He’d come back about 3:30 a.m., turn on the radio and take a shower. The noise would wake me up. I complained to the landlord.”
Mousian said the only visitors he ever saw were “two or three young men, about his age, casually dressed, who’d come in and out during the evening. . . . I don’t know who they were.”
Lucille Sernor, 80, who lives across the alley and “kinda looks after things” for the landlord, noticed that Marks had not been around for the last couple of weeks.
“Then last week, he called me from somewhere and asked me to pick up his mail,” Sernor said. “I don’t know where he called from.”
A day or two later, the FBI began its surveillance, according to Georgette Doren, another neighbor.
‘Grand Central Station’
“It was like Grand Central Station around here,” she said. “They had cars in front, cars in back, cars down the street. There were a couple of men in the apartment next door to his at night--you know, thermoses of coffee and no lights.”
Marks was arrested at the airport on a warrant issued in Orlando on May 24. He was held overnight at the Los Angeles Police Department jail in West Los Angeles before being transferred downtown for his arraignment.
Times staff writers Deborah Hastings, David Holley, Jack Jones and John Kendall in Los Angeles and Michael Hiltzik in New York contributed to this story.