Four of ‘Yuppie Five’ Fall on Hard Times : Member Who Taped Discussions With Them Fares Much Better

Crime doesn’t pay, but cooperating with the authorities can pay off.

That seems to be a lesson in the case of the “Yuppie Five,” the young Wall Street professionals nabbed two years ago as an insider trading ring.

Two of the former defendants are now selling cars, a third has been driving a cab and another is trying to make his way as a financial consultant. But the ring member who secretly taped his confederates to gather evidence for authorities has been cleared to practice law in two states.

The group was back in the news Wednesday, when a federal grand jury in Manhattan indicted three takeover-stock speculators, or arbitragers, and two trading firms for insider-trading offenses that were uncovered in the course of the Yuppie Five investigation.

The Yuppie Five group was accused of trafficking in secret merger information that was gleaned by attorney Michael David from his employer, the prominent New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison. Andrew Solomon, a lawyer and former stock analyst at the Marcus Schloss & Co. securities firm, was first to be confronted by authorities and agreed to wear a “wire” to secretly tape conversations with David and Robert Salsbury, a former takeover-stock speculator at Drexel Burnham Lambert. Also implicated in the ring were stockbroker Morton Shapiro and investor Daniel Silverman.

Two years ago this month, Solomon was fined $10,000 and sentenced to one year’s probation and 250 hours of community service. The sentence was far more lenient than it might have been because of his early and eager cooperation, Securities and Exchange Commission officials said.

New Jobs

Since his sentencing, he has been working at his family’s mattress factory in New Jersey. But last spring he was readmitted to the bar in New York and New Jersey, according to his lawyer, John Siefert.

Lawyer David faces a more difficult task trying to regain his professional standing. He drove a cab in New York until last August, when he began serving a four-month term at the federal prison in Allenwood, Pa.

David faces disbarment proceedings and “will probably have some difficulty” re-establishing a practice if he wins readmission, says his lawyer, Darrell K. Fennell. David, originally from Providence, R.I., has said he may move from New York and start a practice in another community, Fennell said.

Shapiro, meanwhile, is selling Mercedes-Benzes at a Boston car dealership, while Daniel Silverman, an investor who was charged in the case, is selling Subarus in Providence.

Salsbury, now a consultant, emerged from the case in some financial difficulty. At his sentencing in December, 1986, he asked the court not to fine him because he was broke and testified that his parents were supporting him and paying his legal fees.

Attorney Anne C. Flannery, who led the Yuppie Five investigation while she was at the SEC, said it is “reasonable to assume” that the New York courts looked favorably on Solomon’s cooperation when they considered his readmission to the bar.

“He was first to cooperate, and that counts in his favor,” she said. And in agreeing to tape conversations with the others “he thrust himself in a situation of risk. That gets more points.”

Flannery, now in private practice, said it was not unusual for defendants in cases of such seriousness to be readmitted to the bar. Solomon pleaded guilty to federal securities law violations that were the equivalent of misdemeanors in state law, lawyers noted.