The operators of the Washington Trade Exchange, which is under investigation by U.S. prosecutors, asserted yesterday that the exchange has not engaged in any wrongdoing and has been run in an "absolutely proper manner."
Cortes W. Randell and James W. Dyer, partners in the exchange, called a press conference yesterday to respond to an account published Friday by The Washington Post. The Post reported that, according to reliable sources, the exchange is being probed by federal investigators, who are seeking to determine whether the exchange's operators have engaged in fraudulent conduct and whether exchange officials have advocated or participated in questionable or improper tax practices.
A statement issued at the news conference by Randell and Dyer claimed that The Post's account was "totally untrue" and said that the exchange had been a success "from every point of view."
The exchange now claims to include almost 1,000 businesses in the Washington area as members. It is a barter enterprise that allows businesses to trade their merchandise and services with one another through the use of special "credits." The credits may be traded only through the exchange and cannot be redeemed for cash.
Randell, former president of the National Student Marketing Corp., was imprisoned in 1975 on stock fraud charges stemming from a scheme that cost investors millions of dollars. Dyer recently was charged with civil fraud by the Securities and Exchange Commission for his role in a local real estate development venture, known as Research Homes, Inc., which collapsed, leaving hundreds of investors with apparently worthless stock holdings. Dyer signed a consent decree to settle the SEC suit without admitting or denying the agency's allegations.
At yesterday's press conference, Randell and Dyer claimed that the source for The Post's account was a former business associate of Dyer. The former associate, they contended, had become embittered toward them and had threatened to seek newspaper coverage in an attempt to discredit the exchange. "The Washington Post has been had," Randell charged.
In response to questions from other news organizations, The Post declined to identify the sources for its account, saying that some of them had discussed the federal investigation on a confidential basis. The Post said it is incorrect to suggest that information for the newspaper account came from any one source because The Post had numerous sources for the article.
Officials of the U.S. attorney's office in Alexandria, which is in charge of the investigation, have refused to comment on the issue. William B. Cummings, the U.S. attorney for the Eastern District of Virginia, said yesterday he would have no comment.
At yesterday's news conference, Randell and Dyer disclosed few additional details about the exchange's operations. They confirmed that they have opened a similar exchange in Baltimore and were paid a fee to help set up another exchange in Minneapolis.
Randell said he had invested $350,000 in cash and secured assets in the Washington exchange.