Denver-based Blinder, Robinson and Co. and "boiler room" stock brokers in several European countries have been implicated in a penny stock fraud that allegedly netted a group of international swindlers millions of dollars. The alleged fraud, which operated from at least 1984 until last year, involved the peddling of worthless stocks by telephone salesmen to investors in the United States, Europe, the Middle East and the Pacific Rim, authorities say. One of the alleged masterminds of the fraud, Thomas F. Quinn, a disbarred American lawyer with a record of securities violations, was arrested by French authorities last year. More than 20 other alleged participants were arrested in France, Switzerland and West Germany. Quinn's American lawyer, former Watergate prosecutor Richard Ben Veniste, said that earlier this year, after Quinn agreed to repay his alleged victims in France, authorities there agreed to release him while the investigation continued. But he was immediately re-arrested on an extradition request filed by Swiss authorities. Quinn now is being held in a French jail pending further legal proceedings. "He has paid back the alleged victims in France," Ben Veniste said. Documents filed by U.S. prosecutors in a federal court in Las Vegas disclosed that one of Quinn's alleged principal associates, Arnold "Charlie" Kimmes, is now in the protective custody of criminal investigators for the Internal Revenue Service and is cooperating with prosecutors. According to court documents, Kimmes, 67, last summer pleaded guilty to federal racketeering and securities fraud charges. The documents disclosed that, as part of a plea-bargaining agreement, Kimmes agreed to provide details of his role in the fraud, testify in related court cases and submit to polygraph testing. He also agreed to forfeit two yachts -- one worth $1.1 million, the other worth $125,000 -- to the U.S. government. In his plea agreement, Kimmes, who had previously been convicted of conspiracy in a federal securities case, described how he, Quinn and a group of others known as the "company" formed a series of worthless "shell" companies and registered them with the Securities and Exchange Commission, then peddled the shares through U.S. and European brokers and laundered the proceeds back to themselves. The companies they formed, according to Kimmes's plea agreement, had "basically no assets (other than minimal amounts deposited in their bank accounts), no operations, no business history, nor any defined plan for conducting business operations." In the penny stock trade, the companies were known as "blind pool" or "blank check" stock offerings. The officers and directors named in SEC registration documents were "nominees" recruited by associates of Kimmes, although Kimmes and his associates retained effective control, the plea agreement said. According to an SEC affidavit filed in a related civil lawsuit in Chicago, purchasers of some of the stocks promoted by Kimmes included "nominee" accounts in the names "Robert Dzigi" and "Pele LeChien," who were dogs owned by Quinn and his real estate broker. In 1985, according to Kimmes's plea agreement, Quinn helped arrange for Kimmes to meet Meyer Blinder, head of Blinder, Robinson and Co., one of America's largest penny stock brokerages. In return for the introduction, Quinn was to receive a cut of future profits from business Kimmes conducted with Blinder, Kimmes's plea agreement said. According to the plea agreement, Kimmes proceeded to sell Blinder, Robinson the entire stock offerings of several shell corporations. Computer printouts seized by IRS agents during a raid on Blinder, Robinson offices last year disclosed that, in the case of one company set up by Kimmes, Blinder's company bought the stock at a price of 2 cents to 2.5 cents a share, then quickly resold them to the public at prices ranging from 3.25 to 4.34 cents a share, the plea agreement said. Blinder, Robinson brokers sold the shares to the public "using high pressure boiler room tactics," according to a document outlining the charges to which Kimmes pleaded guilty. But they neglected to inform their customers that Blinder, Robinson was the only firm that made a market in the shares, and that therefore the "stock was in fact worth only what price, if any, Blinder, Robinson would be willing to pay" to buy it back, the document said. An affidavit filed in court by Stanley Whitten, chief investigator in the SEC's Chicago office, estimated that the loss to investors from only two of the stock deals promoted by Quinn and Kimmes was "in the millions of dollars". Howard Zlotnick, an assistant U.S. attorney in Las Vegas, where Kimmes's plea agreement was filed, declined to say whether a grand jury investigation of Blinder, Robinson was continuing. Officials of the brokerage house could not be reached for comment. Kimmes's lawyer, Robert Silverman of Los Angeles, also was unavailable for comment.