2 Former Managers at Paine Webber Charged
Two former managers of a major Paine Webber branch office were charged Thursday with helping the investment firm’s former top broker to launder more than $700,000 in cash.
Indicted on two felony counts each were Joseph P. Tota, 43, former branch manager of the office in Paine Webber’s Manhattan headquarters building, and George P. Fahmy, the branch’s former operations manager. Each was charged with one count of conspiracy and one of obstruction of justice, the latter covering the defendants’ alleged attempts to destroy evidence of the scheme. If convicted, the men face maximum sentences of five years in prison and fines of up to $250,000 on each count.
Federal prosecutors said Tota was branch manager until last December and Fahmy was operations manager until January. Both were suspended indefinitely on Thursday by Paine Webber, the firm said. The firm itself has not been charged.
Tota’s attorney, Frank H. Wright, said his client will plead innocent at his arraignment next Thursday. “He emphatically denies the charges,” Wright said. Tota has been on informal suspension at Paine Webber for at least the last 10 days, Wright added, but before then was regularly reporting to work. An attorney for Fahmy could not be reached for comment.
‘Water Into Wine’
The conspiracy counts charge that the men took cash deposits of as much as $72,000 from customers and, before depositing them, broke them into units of less than $10,000 each, the point at which the Internal Revenue Service requires that they be reported. Among other purposes, the IRS uses the reports to ensure that the customers have reported the income on their tax returns.
Tota and Fahmy both referred to the conversion of large deposits into small ones through a process of computer mis-coding as “turning water into wine,” according to the indictments. Both were supervisors of Gary D. Eder, who was Paine Webber’s top-producing and best-paid broker from 1982 through 1986.
Eder pleaded guilty last month to federal charges and agreed to cooperate with the government. Although hints of his maneuvers were disclosed at the time, Thursday’s indictments of Tota and Fahmy add considerable detail.
Still unknown, however, are the identities of the customers for whom the defendants are said to have broken up the large deposits. At the time of Eder’s indictment, Assistant U.S. Atty. David Spears would say only that the customers were not drug traffickers or members of organized crime.
Entries Questioned
According to the latest indictments, Tota helped arrange for the purchase of bank cashiers’ checks in small amounts out of the large sums delivered by customers.
Fahmy, meanwhile, was said to have ordered a cashier in the Paine Webber branch to mis-code cash deposits to make them appear to be checks.
When an internal investigator for the firm questioned some of the entries, Fahmy allegedly paid the cashier $50 to tell the prober that the mis-coding was an inadvertent error.
The prosecutors also charged that Tota, Fahmy and Eder took their branch’s cash deposit records for 1981 through 1983--which contained evidence of the laundering--and threw them away. Fahmy later made trips to a Paine Webber warehouse, purportedly to look for the records, but actually to throw investigators off the track, prosecutors said.
