A federal judge, brushing aside pleas for leniency, yesterday sentenced former deputy defense secretary Paul Thayer to four years in prison for his role in the most prominent insider stock-trading case in recent history.
Thayer, 65, ordered to report to prison at an undisclosed location in Texas on Monday, appeared stunned at the sentence and quietly embraced his wife and daughter.
Moments before U.S. District Court Judge Charles R. Richey imposed the prison term and a $5,000 fine, Thayer told him: "It's an understatement to say that I am sorry and very remorseful. I have destroyed a life of achievement based on trust and integrity, and I have disappointed my family and friends.
"The last two years have been a living nightmare . . . . I've paid a terrible price for an action that has in effect destroyed my life."
Dallas stockbroker Billy Bob Harris, who with Thayer had pleaded guilty to obstruction of justice, also received four years of a maximum five-year prison term and the maximum $5,000 fine. Attorneys for Thayer and Harris had asked that the two men be allowed to perform community service.
U.S. Attorney Joseph E. diGenova told reporters that the sentence "sends a message to Wall Street offices and brokerage houses all over this country that this . . . is serious criminal behavior." DiGenova said Thayer is almost certain to serve at least one year before he could be paroled, although technically he could be considered for parole after serving 60 days.
Thayer has acknowledged that, while serving as chairman of the LTV Corp. and as a director of several other companies, he provided inside information about proposed corporate acquisitions to Harris and Thayer's girlfriend, Sandra K. Ryno. Harris, Ryno and six associates used the information to buy hundreds of thousands of shares of stock that brought them illegal profits of about $2 million when they were sold.
Defense attorneys stressed that Thayer has agreed to make restitution by paying $555,000, and Harris $275,000, in a civil settlement reached Tuesday with the Securities and Exchange Commission. But Richey appeared unmoved by the settlement or arguments that a lifetime of achievements by both men outweighed their crimes.
"This court is not going to hang a medal upon the lapel of your coats for the breach of trust, for the false statements, the perjurious statements and the obstruction of justice that you have engaged in," Richey said.
Thayer maintained his composure outside the courtroom as he comforted his wife of 38 years, Margery, and his daughter Brynn Thayer, an actress in the television soap opera "One Life to Live." One friend said: "We always figured the maximum was two years, maybe as little as six months. But I don't think anybody expected four years."
The sentencing occurred 16 months after the SEC's investigation prompted Thayer to resign as the Pentagon's No. 2 official. Thayer vowed then that he would be exonerated; he pleaded guilty in March.
Thayer's lawyer, Robert B. Fiske Jr., had told Richey that Thayer "did not receive a penny" from the insider trading scheme but wanted to provide a "nest egg" for Ryno, a former LTV receptionist, and her teen-age daughter. But Assistant U.S. Attorney Charles H. Roistacher countered that Thayer was financially supporting Ryno and that she made $150,000 in illegal trading.
"Mr. Thayer probably had more money than everyone else in this courtroom put together," Roistacher said. "He could have given her that money in a legal way . . . . Simply put, he thought he could get away with it, as powerful people sometimes do."
Fiske called Thayer "a great patriot" and "man of integrity" who rose in "Horatio Alger style" from being an ace pilot in World War II to the helm of LTV. He said Thayer had done extensive charity work and raised funds for the Vietnam Veterans Memorial before making "a tragic mistake."
Fiske said Thayer should be allowed to pay for his crime by working with a Dallas community group. "God knows he has suffered enough," Fiske said.
Roistacher said prosecutors had considered the defendants' achievements in allowing them to plead guilty to a single charge. "These men . . . obstructed that investigation every way they possibly could by committing perjury," he said. "That is while Mr. Thayer was deputy secretary of defense."
Harris, a former nightclub owner who once touted stocks on television in Dallas, told the judge: "I am sorry for what I've done, and I take full responsibility for it."
Harris' attorney, Judah Best, said Harris has helped others throughout his life and is broke. "He is a little man . . . . " Best said.
"A little man who made over $700,000 a year as a stockbroker," Richey interjected.
Best suggested that Harris, barred from working as a securities dealer, be allowed to atone by lecturing stockbrokers about the immorality of insider trading. "I don't see where any good is going to come . . . from Billy Bob Harris going around talking to other stockbrokers," Richey said, adding that he was "shocked and surprised" at the suggestion.
Thayer had received letters of support from such prominent figures as former president Gerald R. Ford and Gen. John W. Vessey Jr., the chairman of the Joint Chiefs of Staff. Harris was supported by his pastor at the Lovers' Lane United Methodist Church, who said Harris had "repented."
Another letter of support came from James A. Rolfe, U.S. attorney in Dallas and a friend of Harris. But diGenova said Rolfe had "besmirched" his office by writing the letter on official stationery.
Prosecutors said Thayer and Harris engaged in a pattern of insider trading that benefited a close circle of friends, including Harris' girlfriend, Juli Williams; Thayer's banker, Gayle L. Schroeder, who has agreed to repay $176,383; Thayer's doctor, Doyle L. Sharp; Sharp's friend Julia D. Rooker; insurance agent Malcolm B. Davis, and Atlanta stockbroker William H. Mathis, a former New York Jets football player.
In one instance, prosecutors said, Thayer and Harris used a front man to buy 10,000 shares of stock in the Grumman Corp. The purchases were made after Thayer called Harris in September 1981 and told him that LTV was completing plans to seek to acquire Grumman.
The price of Grumman stock jumped sharply when the takeover bid was announced. Thayer and Harris later gave the $100,000 in profits to Ryno and Williams in a covered breadbasket, joking that they had some "bread" for them.
In July 1982, Thayer, then a director of Anheuser-Busch Cos., told Ryno of plans to acquire Campbell Taggart Inc. Ryno relayed the news to Harris, who bought 56,000 shares of Campbell Taggart stock for himself, Ryno and others. Harris, Ryno and their associates later sold their stock at a profit of more than $500,000.
Two months later, while serving as a director of the Allied Corp., Thayer used an assistant's credit card to call Harris from a pay phone with information that Allied was about to propose a takeover of Bendix Corp. Nine minutes later, Harris bought $2.3 million in Bendix stock for himself, Ryno and six others, who later sold the stock at a profit of $689,000