The former secretary of stockbroker Rafi Khan testified Thursday that he manipulated stocks to benefit a coterie of mutual-fund managers who had personal accounts with him.
Khan fired the secretary, Kristina Kraverica, in late 1993 after she had worked for him for seven months. She testified on behalf of Costa Mesa-based ICN Pharmaceuticals Inc., which accused Khan of violating federal securities laws in a lawsuit filed in U.S. District Court in Manhattan.
Kraverica said that Khan would alert the mutual-fund managers when he was about to tout a stock so that they could buy it for their personal accounts. After he recommended the stock, the fund managers would buy it on behalf of their investors, driving its price up, she said.
"You said you'd make them all millionaires, that they were all your best friends," Kraverica told Khan as he cross-examined her, acting as his own attorney.
The former secretary seemed to wobble, however, when asked for specifics about her claim that Khan maintained trading accounts that were fronts for the money managers' personal accounts.
"Well, some of the accounts had, like, strange names," she said at one point, when Khan asked her why she considered them suspect. "This is when I started to believe the gossip."
She also wavered under questioning from U.S. District Judge John E. Sprizzo about her allegation that Khan destroyed certain documents that his law firm, Shea & Gould, requested during his legal fight with ICN.
"That statement in your affidavit is not strictly accurate?" the judge finally asked.
"Yes, I'm almost positive, but I don't know what they are," Kraverica said when asked which documents Khan had destroyed.
Khan and ICN have been feuding since the spring of 1993, when he launched a proxy battle to take control of the drug company.
Khan has a $29-million counterclaim pending against ICN, which is the target of a Securities and Exchange Commission investigation involving alleged insider trading by its chairman, Milan Panic.
Under cross-examination by Khan, Kraverica also repeated her contention that she spurned his sexual advances. In the past, he has claimed that Kraverica is seeking revenge because he spurned her.
After Thursday's hearing, Khan called her "a pathological liar." He said he fired her because "she brought a dog to work, and she was basically incompetent."
Kraverica declined to comment after the hearing.