Ex-Broker Pleads Guilty to Fraud

Former investment broker S. Jay Goldinger pleaded guilty Monday to four counts of wire fraud for scheming to shift his clients’ funds to cover trading losses.

Goldinger, who made trades from now-defunct Capital Insight, told U.S. District Judge Consuelo B. Marshall in Los Angeles that he illegally reallocated funds in his clients’ accounts because many of them were seeking to show gains or losses to obtain a “tax advantage.”

Goldinger’s attorney, Brian O’Neill, said outside the courtroom that “some of these clients were well aware of what was going on, but there were victims who were not [aware of it].”

One of Goldinger’s clients, PairGain Technologies of Tustin, has pleaded guilty to one felony count for failing to maintain accurate books and agreed to pay $1.4 million in fines. Refco Inc., a futures brokerage that allegedly cleared the trades from Goldinger’s firm, earlier this year agreed to pay $8 million to settle a case filed by the Commodity Futures Trading Commission.

Goldinger faces a maximum of 20 years in prison and a $1-million fine. Sentencing was scheduled for April 10. Federal prosecutors also plan to seek restitution of up to $72 million, though the chances of collecting such an amount are slim.

Since leaving the investment business in 1995, O’Neill said, Goldinger has been operating an organization to feed and clothe the homeless.