Firm’s Partner, 8 Others Arrested on U.S. Charges : Cocaine Sales Alleged at N.Y. Brokerage
The securities firm of Brooks Weinger Robbins & Leeds got into plenty of trouble with the authorities when it was just selling stocks. On Thursday, it got into even more trouble when prosecutors charged that it was involved in sales of another commodity: cocaine.
The drug was almost as popular a currency at Brooks Weinger as were greenbacks, according to affidavits and a search warrant filed in court here by federal prosecutors in connection with the arrests of nine current and former employees of the firm on drug charges.
‘Free Sample’ Cited
One broker was paid for a shipment of cocaine to an executive whose company was about to be brought public by Brooks Weinger with $10,000 worth of stock in the executive’s company, the government charged. Others were accused of paying secretaries and clerks with cocaine for minor favors that included steering new clients to them. On at least one occasion, a “free sample” of cocaine was shipped to a buyer through the firm’s own messenger service.
The firm has nine branch offices, including one in San Diego, and about 300 stockbrokers. It is well-known as an underwriter and broker of “penny stocks,” which are extremely speculative, low-priced stocks in start-up companies.
Among those charged Thursday with possession and distribution of the drug was Wayne Robbins, one of the firm’s partners. Robbins, according to U.S. Atty. Rudolph W. Giuliani, would sometimes pay his brokers for cocaine by giving them extra “leads,” or the names of potential brokerage clients.
‘Good, Trusted Source’
When another partner once fired a broker, Robbins rehired him a day later “because he was a good, trusted source of cocaine,” according to the federal search warrant, which was based on the testimony of at least three undercover agents who won jobs at the firm.
Government officials swarmed through Brooks Weinger’s two Manhattan offices Thursday collecting documents sought in their search warrant. “They’re taking every record in the place,” said one broker who asked to remain unidentified. “The managers are telling us we’ll be reopening on Monday, but I can’t see how.”
In an unusual step, Giuliani said the government had also filed a motion to seize Robbins’ roughly 30% ownership in the firm under laws allowing the seizure of assets used in narcotics trading. He called the motion “probably the first attempt to seize the assets of a brokerage house on a narcotics charge.”
Officials of the firm could not be reached Thursday at their offices. The telephone at Robbins’ suburban Long Island home was disconnected.
8 Others Held in Sweep
Six employees of other Wall Street firms and two uptown suppliers were also arrested Thursday during a federal sweep of drug dealers in the financial district.
This was not Brooks Weinger’s first brush with the law. The firm, its predecessor partnerships and its principals have been brought into court repeatedly for violating securities laws in connection with its main business: selling “penny stocks,” or those that trade initially at prices of between 1 and 10 cents a share.
The penny stock business, which often relies on high-pressure sales to unsophisticated customers, has been rife with fraudulent operators, and Securities and Exchange Commission filings indicate that Brooks Weinger has been no exception.
Suspended for 2 1/2 Years
In 1976, twice in 1981, and again last January officials of the firm were charged by the SEC with having manipulated the price of stocks they were offering. Although the firm settled the charges without admitting or denying guilt, the second 1981 charge resulted in its suspension for 2 1/2 years from underwriting any over-the-counter stocks.
On March 24, moreover, three of the firm’s top executives, not including Robbins, pleaded guilty to criminal contempt charges for violating a 1981 injunction against committing securities fraud.
Times researcher Siobhan Flynn in New York contributed to this story.
