A.S. Goldmen & Co., a defunct brokerage, and 33 of its executives and employees were charged by New York and federal authorities yesterday with manipulating small-company public offerings, costing investors $100 million in trading losses.
The Securities and Exchange Commission accused New Jersey-based A.S. Goldmen, President Anthony J. Marchiano and Stuart E. Winkler, a Goldmen financial principal and former supervisor for the National Association of Securities Dealers, of manipulating shares in at least six initial public offerings the brokerage underwrote from 1994 to 1998.
Manhattan District Attorney Robert Morgenthau also brought criminal charges against A.S. Goldmen, Marchiano, Winkler and numerous 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.
"We will spare no effort to close the doors of `boiler rooms' that fraudulently peddle stocks to unsuspecting investors and tarnish the reputation of our capital markets," said the SEC's enforcement director, Richard Walker.
At a news conference, Morgenthau said, "A lot of these losses were personal tragedies for the people involved." One Maryland couple lost $400,000, he said, and a woman who had set aside $25,000 for her daughter's wedding lost it all.
In its heyday, A.S. Goldmen had offices in 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.
Winkler, who was a field supervisor in the NASD's New York office about 20 years ago, helped Goldmen conceal its misdeeds from federal and state regulators, Morgenthau said.
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.
The SEC alleged that A.S. Goldmen's Florida office became a "boiler room" that used aggressive sales practices to sell the Millennium securities.
The SEC also accused six other brokers who worked in Goldmen's Florida or New Jersey offices of securities violations. They are John T. Diasabeyagunawardena, John P. DelCioppo, Vincent J. Lia, Duane Taylor and Charles Trento.
According to the SEC, A.S. Goldmen, Marchiano, Winkler and the other brokers participated in five stock fraud schemes from 1994 to 1998.
The firm and individual defendants couldn't immediately be reached for comment. An administrative law judge will hold a hearing to determine whether the SEC allegations are true and whether sanctions, including fines, are appropriate.
The district attorney also charged A.S. Goldmen Vice President Salvatore Marchiano, who is Anthony Marchiano's brother, and senior brokers Charles Principato, Stephen Kaplan, John Messina, Michael Cimli and Paul Cimli. Paul Cimli and another salesman, Paul Colontino, had others take their licensing exams for them, Morgenthau said.