Judge Frees Assets of Blinder, Robinson

A judge Wednesday lifted a freeze on the California assets of the controversial penny-stock broker Blinder, Robinson & Co., dealing a setback to a Mission Viejo man who alleges in a lawsuit that the company defrauded him of $298,000.

Superior Court Judge Robert A. Knox last month granted a request by Jeff Ferentz, an attorney representing Arthur Eastman, for a preliminary injunction freezing all the California assets of Blinder, Robinson and affiliated companies.

Ferentz had argued that Blinder was transferring money out of the country, and that by the time Eastman’s case came to trial and worked its way through the appeals process, there would be no money left to pay any judgment against the company.

But Knox, in denying a motion for a permanent injunction on the asset freeze, said Ferentz’s evidence that Blinder, Robinson was moving money out of the country was “hearsay.”

Ferentz called Knox’s decision Wednesday a “miscarriage of justice,” while Andrew M. Sussman, representing Blinder, Robinson, said: “We got exactly what we wanted, and we are very pleased.” The case is expected to go to trial in March or April.

Eastman, the owner of a transmission shop in Orange, said Blinder, Robinson defrauded him in 1985 and 1986 through deceptive sales practices and phony deals in stocks that were in fact bought and sold only by Blinder, Robinson. His tale has been the subject of numerous magazine articles and a “60 Minutes” report on penny-stock fraud.

Penny stocks are very cheap shares in small companies that are not traded on a stock exchange, and they have long been an attractive vehicle for unscrupulous financiers.

Blinder, Robinson, a Denver-based company run by flamboyant, tough-talking Meyer Blinder, has been the subject of numerous inquiries by the Securities and Exchange Commission, the Internal Revenue Service and state regulatory and law enforcement agencies, and has also been the target of many lawsuits from clients who claimed they lost money.

Although Blinder, Robinson--generally considered to be the largest penny-stock broker in the country--has been very successful defending itself in court, business has declined in recent years and a number of its offices have been closed. The company’s California offices are in Irvine and Mission Viejo.