A.S. Goldmen & Co., a defunct brokerage, and 33 of its executives and employees were charged by New York and federal authorities Thursday with manipulating small-company public offerings, costing investors $100 million in trading losses.
Manhattan Dist. Atty. Robert Morgenthau brought criminal charges against New Jersey-based A.S. Goldmen; its president, Anthony J. Marchiano; an A.S. Goldmen financial principal and former supervisor for the National Assn. of Securities Dealers, Stuart E. Winkler; and a group of former brokers and other employees of the firm.
Several separate indictments were handed down, covering 240 counts, including charges of enterprise corruption, scheming to defraud investors, criminal possession of stolen property and money laundering. The individuals face up to 25 years in prison each, Morgenthau's office said.
The Securities and Exchange Commission also charged A.S. Goldmen, Marchiano and Winkler in a civil administrative case with manipulating shares in at least six initial public offerings that the brokerage underwrote from 1994 to 1998.
In its heyday, A.S. Goldmen had offices in Los Angeles; Manhattan; Naples, Fla.; and Iselin, N.J., with nearly 100 brokers and 50,000 accounts, prosecutors said. The firm was created in 1988 and effectively shut down last fall after authorities searched its offices.
The New York district attorney's office alleges that Winkler, who was a field supervisor in the NASD's New York office about 20 years ago, helped A.S. Goldmen conceal its misdeeds from federal and state regulators.
The charges stem from the firm's sale of 10 securities: Millennium Sports Management Inc., Stadium Capital Inc., Independence Brewing Co., Imatec Ltd., Wanderlust Interactive Inc., Winfield Capital Corp., Veritas Music Entertainment, Nickelodeon Theatre Co., Cinema Ride Inc. and Innovative Tech Systems Inc.
In its complaint, the SEC alleged that A.S. Goldmen, Marchiano and Winkler sold 3 million unregistered shares of Millennium Sports, raising $7.5 million for the firm. A.S. Goldmen's Florida office then became a "boiler room" that used aggressive sales practices to sell the Millennium securities, the SEC alleged.
The SEC also charged six other former brokers who worked in A.S. Goldmen's Florida or New Jersey offices with securities violations.
According to the SEC, A.S. Goldmen, Marchiano, Winkler and the other brokers participated in five stock fraud schemes from 1994 to 1998.
One of them involved six IPOs underwritten by A.S. Goldmen, the SEC complaint said. Winkler placed IPO shares into four nominee accounts, then had A.S. Goldmen immediately buy those securities after the IPO, making at least $25,000 for the Winkler nominee accounts, the SEC charged. A.S. Goldmen and Winkler would then resell the securities to investors at even higher prices, the SEC alleged.
Lawyers for the firm and individual defendants either could not be reached for comment or did not return calls.
An administrative law judge will hold a hearing to determine whether the SEC allegations are true and whether sanctions, including fines, are appropriate.