Securities and Exchange Commission lawyers are disputing claims by former financial whiz Cortes W. Randell that he lost $116,000 as the result of a bankruptcy case that cost Virginia investors hundreds of thousands of dollars.
Randell, a McLean businessman, was jailed in 1975 for his role in the fraud scandal involving National Student Marketing Corp.,which he formerly headed. Last year, he was accused of fraud by the SEC in connection with a Virginia real estate investment firm known as a National Commeercial Credit Corp.(NCCC).
The SEC has referred the case to the department of justice, which reportedly is conducting a grand jury investigation of the collapse of NCCC.
Randell signed a consent decree last December, neither admitting nor denying the SECs allegation that he had "ravaged" NCCC of its assets.
But the SEC is claiming that a court-mandated according of Randell's assets, ordered aspart of that consent decree, is invalid because the work done allegedly by an acquaintance of Randell who was illegally practicing accounting at the time.
The accounting could be considered important because if the results showed profits, Randell could be forced to disgorge those sums to approximately 70 investors-including many former and present Virginia residents who lost hundreds of thousandof dollars through purchasing NCCC bonds and notes.
Specifically, the SEC is charging that the accounting by Bethesda "business consultant" was neither certified nor licensed to practice accountancy in Virginia, Maryland or theDistrict at the time. Hence, according to an SEC-obtained interpretation by the Virginia Stae Board of Accountancy, Walton was "illegally engaged in the practice of public accountancy in Virginia."
Furthermore, the accounting was allegedly conducted improperly because Walton relied on Randell to supply selected data, then failed to verifycritical items listed in the accounting.
The SEC lists as one example the accountant's failure to analyze nine personal bank accounts held in the name of Randell or his wife Joan. Another example is the accountant's failure to include certain known funds as assets while listing as debts sums used to obtain those funds.
Waltons could notbe reached for comment yesterday, but in a deposition last June he asserted that "I do believe I am qualified to file this accounting) with the court." Walton was cerified as a cerified public accountant in Oklahoma in 1971, according to the deposition.
The former chairman of NCCC, Harry Koenigsberg, 73, pleaded guilty Sept.22 to federal charges of securities fraud. Koenigsberg had been accused of selling unsecured notes to NCCC investors and fialing to inform them of certain "material facts", including the fact that Randell, a convicted felon, was a hidden butcontrolling shareholder of NCCC stock.