A Miami stockbroker who operated a multi-million-dollar investment fund called one of the most significant stock frauds uncovered in recent years, pleaded guilty yesterday to violating interstate transportation laws.
Representatives of the Justice Department's organized-crime strike force had charged Dennis Greenman, 36, with violating federal statutes prohibiting interstate transportation of stolen property, a charge that carries a maximum penalty of 10 years' imprisonment and a $10,000 fine.
The charges, which centered on an incident in which Greenman allegedly "caused" an attorney to cross state lines to borrow money to invest in a fraudulent venture, were filed earlier this week in U.S. District Court in Tampa.
The charges grew out of an investigation by the organized-crime force, the FBI, and the Securities and Exchange Commission, which had made the assessment of the fraud's significance. The investigation uncovered an operation believed to have defrauded investors out of more than $50 million.
According to investigators, Greenman, a broker and senior vice president with Barclay Financial Corp., used greed and an aura of exclusivity to lure investors into an invitation-only investment company where the minimum investment was $100,000. He then used counterfeit computer printouts from reputable brokerage firms to persuade investors that they were making a profit when Greenman's investments actually were losing money, investigators said.
According to an FBI announcement of the charges, Greenman induced an Atlanta attorney to borrow several million dollars from the Metropolitan Bank & Trust Co. of Tampa to be invested in the fraudulent investment fund operated by Greenman.
The SEC received a court order freezing the fund's remaining assets last April, at the same time the FBI seized the fund's records. A court-appointed receiver has been attempting since then to recover funds that may be owed to investors.
According to investigators and the charges, Greenman told investors that he could earn 80 percent to 90 percent profit on their money because he had a computer that allowed him to take advantage of short-term differences of prices of stocks in different markets. No such computer existed, the FBI's investigation found.
The alleged scheme attracted investors, including state and local elected officials, bank officers, civic and church leaders, and religious and educational institutions.
U. S. District Judge George C. Carr yesterday accepted Greenman's plea, which was entered under an agreement with federal prosecutors. Greenman was promised no leniency but pledged to use his assets to make restitution to investors, according to prosecutors