SEC Order Bars 2 From Brokerage Industry : Woodland Hills: Latest action comes after regulators shut down Brokers Investment Corp., alleging it was a huge boiler-room operation. Other former Brokers Investment personnel have set up a new firm nearby.

Norman D. Shubert and Daniel H. Steinberg, accused by the Securities and Exchange Commission in a complaint filed in federal court last spring of running a huge boiler-room operation in Woodland Hills, have agreed to a federal order that bars them from the brokerage industry for life.

The SEC order prohibits Shubert and Steinberg, both Calabasas residents, from “association with any broker, dealer, municipal securities dealer, investment adviser or investment company.” Shubert, 61, and Steinberg, 37, signed the administrative order without admitting or denying guilt, and it took effect July 29.

Steinberg said the cost of fighting the SEC was one reason he agreed to the ban. “I was left with few alternatives.” Steinberg now works at a memorabilia business in Tarzana called American Legacy. “I’m out of the securities industry.”

Shubert did not return telephone calls for this story.

The SEC order is the latest, and strongest, regulatory action against the former owners of now-defunct Brokers Investment Corp. in Woodland Hills. And it may have been prompted by reports that Shubert and Steinberg have been involved with a new brokerage called William Lawrence Securities, also in Woodland Hills, which was formed by executives at Brokers Investment as regulators were closing in on that firm.

It was last year when the SEC initially suspected that Brokers Investment was violating securities law. In April the SEC alleged in Los Angeles federal court that Shubert and Steinberg were running a nationwide scam in which Brokers Investment, along with an obscure San Diego firm called U.S. Fiberline Communications, defrauded investors of at least $40 million by selling dubious investments in telecommunications. The SEC said Brokers’ salesmen raised $109 million from 6,000 investors by reading sales scripts that talked about annual returns of up to 32%, and that $40 million was pocketed or fraudulently used by Shubert, Steinberg and others.

An SEC investigation is still determining how much money is missing and where it went. Pending that report, expected by year-end, the defendants could be forced to make restitution to investors and pay civil penalties.

In April of this year, Shubert and Steinberg signed an SEC consent order, without admitting or denying guilt, promising not to sell unregistered securities or break any other securities law. And under pressure from the SEC, Brokers Investment shut down last spring.

But as Brokers was winding down its business early this year, William Lawrence was setting up shop in Woodland Hills, just down the street from where Brokers once operated in Warner Center. When William Lawrence opened for business in early spring, Shubert had an office in the back of that brokerage.

Although Shubert and Steinberg had no official titles at William Lawrence, they held a reception for its opening, and Shubert attended regular meetings at the new brokerage, according to an internal company memo and former employees at William Lawrence. The SEC, when asked about Shubert’s presence at William Lawrence earlier this summer, simply said he should not be there.

William Lawrence, in materials sent to former clients of Brokers Investment, described itself as a complete brokerage that deals in mutual funds, stocks and other investments. The brokerage was incorporated by Martin W. May in 1991 when he was head of sales operations at Brokers Investment, papers from the secretary of state and court proceedings show. May, 42, is a third defendant in the SEC’s lawsuit against Brokers, and is currently negotiating a separate settlement with the SEC, the agency said.

May was secretary and treasurer at William Lawrence, but recently resigned from those posts and is now working as a broker at William Lawrence, said Raymond H. Niesslein, formerly senior vice president at Brokers and now president of William Lawrence.

Niesslein confirmed that former Brokers Investment personnel made the move to William Lawrence early this year, taking with them some active accounts and client lists from Brokers Investment. Niesslein also said that Shubert had maintained an office at William Lawrence.

However, Niesslein said in an interview that Shubert had moved out of William Lawrence’s office in early July and that Shubert now has no involvement with the brokerage. Asked what Shubert had been doing at William Lawrence’s offices, Niesslein said, “he had a lot of things he had to wind up, and we allowed him to lease some office space.”

Niesslein added: “We have a lot of old baggage. We’re trying to eliminate it.”

It was Shubert who formed Brokers Investment in 1985 as a discount brokerage, and a couple of years later Steinberg and Niesslein joined him. From 1989 to mid-1992, Brokers sold mainly limited partnerships that were supposed to be invested in U.S. Fiberline’s projects.

Niesslein, 37, is a longtime associate of Steinberg. Niesslein has not been accused of any wrongdoing by the SEC in the Brokers Investment case. Before joining Brokers, he worked with Steinberg at a Canoga Park brokerage selling oil and gas deals. In 1984, Niesslein and Steinberg were disciplined by regulators in Wisconsin and California, and without admitting or denying guilt, they agreed to stop selling unregistered securities.

But there are signs that regulators are now looking into activities at William Lawrence, which is selling some investment deals that were originally designed and marketed by Brokers Investment.

Complaints have been filed by investors with the National Assn. of Securities Dealers--a regulatory group based in Washington--involving William Lawrence. The NASD typically investigates investor complaints.

Aaron Rose, a former William Lawrence broker, said a compliance officer with the NASD last month questioned him extensively about William Lawrence’s use of sales scripts--or prepared materials that are read to potential investors.

The NASD declined to comment on whether it was investigating William Lawrence. But a regional official at the NASD said it was responding to some complaints from clients of William Lawrence.

Rose and other former employees at William Lawrence provided to The Times copies of scripts that they said were furnished by managers at William Lawrence. In one set of scripts, designed for a boat-leasing deal called IBS Financial Partners, brokers at William Lawrence were told to tell potential investors: “IBS is certain that they can place easily, $4 million per month from April throughout the rest of 1993 and can double that number in 1994. . . . Based on these numbers” investors “could have three times their investment in just two years.”

Such scripts, though marked “for training purposes only,” were read verbatim by salesmen, former William Lawrence employees said. Earlier this month, Michael Burnett, a Louisville, Ky., businessman who is an IBS director, confirmed that IBS, which is a start-up operation, has yet to produce any revenue. NASD rules strictly prohibit presenting optimistic or unrealistic forecasts about investments.

Niesslein, the president of William Lawrence, acknowledged the existence of such sales scripts, but said that in the last month he had discarded them and is instructing brokers at William Lawrence not to read training materials over the phone. “We know where Brokers Investment got in trouble and don’t want to repeat their mistakes,” Niesslein said.

Finding investors for the IBS partnership was originally handled by Brokers Investment and then was marketed by William Lawrence, Niesslein said. According to the prospectus, IBS, a Nevada-incorporated business formed partly by Shubert and Steinberg, signs agreements with boat manufacturers. In turn, the boat makers agree to lease boats to people through IBS, for which IBS receives certain fees. The prospectus, dated in February, said Shubert and Steinberg are general partners in IBS, meaning they are part of the management team and entitled to benefit from the performance of the business.

Burnett said Shubert and Steinberg resigned as general partners of the business last spring, although they remain minority shareholders. But the change has not yet been recorded with the secretary of state’s office in California, which such partnerships must do within 30 days of the change. Burnett said failure to record the management change was an “oversight” and that it is now being addressed.

Shubert, as recently as June, was also soliciting money from investors for another deal that Brokers sold late last year, according to letters sent out to potential investors. That deal was designed to raise more than $1 million to finance a firm called Berleca USA, which wanted to market apparel using the Coca-Cola name under a license agreement with the beverage company.

According to the prospectus, Berleca is partly owned by Shubert, and the program is managed by Sovereign Capital Group of Las Vegas, which is also owned by Shubert and was the managing partner of some Fiberline deals. Coca-Cola, based in Atlanta, declined to comment.

In a letter dated June 8, Shubert told investors that Berleca was not performing well, and he concluded by saying: “Should any of you have the ability and the interest in providing bridge financing to Berleca, please contact Warner Capital Group, their investment banker.”

State records show Warner Capital is owned by Thomas Shubert, Norman Shubert’s son. Warner Capital operates in the back end of William Lawrence’s offices.

Niesslein said Thomas Shubert, who also previously worked at Brokers Investment, was not involved in any way with William Lawrence. Thomas Shubert refused to comment.