A former Cruttenden & Co. stockbroker pleaded guilty Wednesday to receiving gifts, including a $50,000 Jaguar luxury car, from Spectrum Information Technologies in return for helping the wireless data company manipulate its stock price.
Federal prosecutors said Reagan Richmond, 34, of Tustin conspired to manipulate Spectrum stock from 1992 to 1994 while working as a broker at Irvine-based Cruttenden, now known as Cruttenden Roth, and at Regency Capital Group Inc. in Glendale.
Richmond admitted recommending the stock to brokers and investors while receiving undisclosed payments from Spectrum, including $10,000, the Jaguar, first-class airline tickets to New York, limousine service and use of a New York apartment.
He also was accused of conspiring with Benihana Inc. founder Rocky Aoki and Spectrum consultant Donald Kessler to help Aoki buy Spectrum stock with non-public information from July 1993 to January 1994.
Aoki made a profit of about $300,000 on the deal, the government said. Kessler admitted insider trading in a plea bargain with the government.
Richmond, appearing before U.S. District Judge I. Leo Glasser in Brooklyn, pleaded guilty to two counts of conspiring to commit securities fraud. He also agreed to cooperate with a continuing investigation by U.S. postal inspectors.
Richmond will be sentenced Sept. 24. He faces up to five years in prison and up to a $250,000 fine.
Cruttenden Roth in-house counsel Richard Platt said he never heard of the case until Wednesday. Richmond joined the brokerage in 1991 and left voluntarily in January 1993. Nothing in his personnel file suggested any wrongdoing, Platt said. "We haven't been contacted about this. We have no knowledge of any ongoing investigation," he said.
Regency Capital Group officials couldn't be reached for comment.
Spectrum's shares soared 46% on Oct. 18, 1993, after the tiny, money-losing Long Island company hired John Sculley, former chief executive of Apple Computer. The stock plummeted when he quit less than four months later.
Richmond admitted touting Spectrum in media interviews and issuing a research report recommending purchase of Spectrum shares without disclosing that it was actually written by a Spectrum employee or that he was on Spectrum's payroll. Richmond wasn't available for comment.
Aoki was indicted earlier this month on charges of making more than $590,000 through illegal insider trading of Spectrum stock, and paying Kessler for his tip.