A story in the March 10 editions of the Washington Post erroneously left the impression that Virginia stock-broker Richard M. Kulak had falsified the records of Research Homes Inc. to make it appear that certain stock sales had taken place three years after they actually did. Federal prosecutors involved in the case said other persons, not Kulak, falsified the records. Kulak pleaded no contest last Friday to charges of transporting unregistered securities. In addition, the headline and article incorrectly identified Kulak as "head" of the Springfield brokerage firm of Kulak, Voss & Co. Inc. The U.S. Attorney's Office in Alexandria had identified Kulak as president of the firm he helped to found, but Stephen C. Voss, the owner of all stock in the securities company and president since mid-1975, said yesterday that Kulak had not participated in management since then and had been employed as a salesman. Over the weekend, Voss said, Kulak's employment was terminated and the firm was given a new name yesterday -- Voss & Co. Inc.
The head of a Northern Virginia stock brokerage firm who has been under federal investigation for fraud yesterday pleaded no contest to a charge of transporting unregistered securities in connection with the collapse of a local real estate venture several years ago.
Richard M. Kulak, who opened Kulak, Voss & Co. Inc., in Springfield six years ago, the first "discount" brokerage firm in the Washington area, entered the plea in U.S. District Court in Alexandria, to avoid action by a federal grand jury, prosecutors said in court yesterday.
As part of his plea agreement with the U.S. Attorney, Kulak must cooperate with the grand jury investigation of others allegedly connected with a scheme to defraud investors of the real estate venture known as Research Homes, Inc.
The circumstances of the firm's collapse were first investigated by the Securities and Exchange Commission, which brought suit two years ago. The SEC accused RHI's directors, in a civil lawsuit, of defrauding about 500 mostly Washington area investors of RHI.
The SEC alleged that the principals sold unregistered stock -- both their own and the company's -- by false claims.
Kulak, standing before U.S. District Judge Albert V. Bryan Jr., did not contest detailed allegations presented by prosecutors that he sold at least 37,500 shares of unregistered securities of RHI.
The SEC said in its suit that RHI stock was sold through nominees, both in the U.S. and abroad, in an attempt to avoid the registration requirements under federal securities laws.
According to Assistant U.S. Attorney Nash W. Schott, RHI, formed in 1970, never filed a registration statement with the SEC as required for companies selling snares of stock publicly.
From 1970 on, Kulak acquired 78,500 shares of unregistered RHI securities. From 1965 to 1971 Kulak was a stock broker for Reynolds Securities and was a registered principal in Kulak and Voss since 1973.
"Kulak knew that these securities had definite restrictions... which were clearly stated on the back of the certificates," Schott said. Kulak also signed an investment letter delivered to RHI stating that he knew the stock was not registered and that he had no intention of "making a public offering or distribution" of the stock except as permitted under SEC law.
Kulak never paid any money for the share of stocks listed in his name on RHI books, Schott said. At least 58,500 shares of unregistered securities of RHI were placed in Kulak's name as if he were the real owner of the securities when he knew he wasn't, Schott said.
According to Schott Kulak was a nominee through whom an RHI director sold unregistered securities. Kulak sold at least 37,500 shares of the securities for the director knowing that they were restricted. Kulak also falsified records to make it appear that the sales had taken place three years after they actually did.
Kulak, a Notre Dame graduate, is scheduled to be sentenced on April 6. He faces a maximum penalty of five years in jail and a $10,000 fine.
RHI investors claimed following the collapse, that the management, many of whom were members of the Church of Jesus Christ of the Latter-Day Saints, used their Mormon religion to sell both real estate and stock.