An article in Thursday's Post, citing a Philadelphia Inquirer report, misstated the amount of money raised by the Jeff Bell for Senate Committee in New Jersey in 1982. The Bell campaign raised $1.9 million by election day 1982, not $561,000, as the Inquirer reported. Of the total, $179,000 came from employes and associates of First Jersey Securities Inc., the Inquirer said.
A federal grand jury and a congressional subcommittee are investigating allegations of stock manipulation and illegal campaign contributions by First Jersey Securities Inc., and its owner, Robert E. Brennan, according to the subcommittee chairman.
Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce subcommittee on oversight and investigations, yesterday released copies of a letter he wrote in February to the Justice Department disclosing the subcommittee's investigation.
In the letter, Dingell said he understood that a number of First Jersey sales representatives have been subpoenaed and have testified before a grand jury "on the subject of illegal campaign contributions and other subjects."
Brennan, whose frequent television advertisements show him flying in a helicopter and championing the small "emerging growth companies" in which First Jersey specializes, yesterday denied wrongdoing by himself or his firm. He said he is aware that some former employes recently have been asked to testify before a grand jury, but he said the allegations are two years old.
Dingell's charges are "pure harassment" and part of a 10-year "vendetta" against him by the Securities and Exchange Commission, Brennan said.
The SEC filed a complaint in October charging Brennan and First Jersey with allegedly making illegal, excessive markups on stock transactions and manipulating stock prices to generate profits. Yesterday, the SEC declined to comment on the status of that complaint.
Dingell's letter also refers to an investigation of political contributions by First Jersey sales representatives to the 1982 campaign of Jeffrey Bell, who ran unsuccessfully for the Republican nomination to the U.S. Senate from New Jersey.
The Philadelphia Inquirer reported yesterday that $179,000 of the $561,000 received by Bell's campaign by Election Day 1982 had come from First Jersey employes and their wives. Seven First Jersey salesmen told the newspaper they were given money by First Jersey executives and told to contribute to the campaign in their own names. Federal law bars corporations from giving employes money to contribute to a federal candidate. Additionally, an individual cannot exceed contribution limits by channeling money through others.
Brennan, who was Bell's finance chairman, said he encouraged his employes to contribute to the campaign, but required them to submit a statement that the contributions were made voluntarily, with their own funds. Bell told the Inquirer that he had not heard of any allegations of improper contributions.
Brennan said that, when he learned of the campaign-contribution allegations two years ago, he "voluntarily visited" with an assistant U.S. attorney in New York to discuss the matter.
The statute of limitations on federal election laws violations in the 1982 campaign has expired, he said. "The fact that this has been brought to life again . . . is another manifestation of the attempts to smear me and my firm that have gone on for the last 10 years," Brennan added.
Dingell, who also is chairman of Energy and Commerce Committee, said in the Feb. 14 letter that the subcommittee has "substantial evidence that Brennan masterminded a scheme to funnel well over $100,000 in apparent illegal campaign contributions to Bell's campaign using First Jersey Securities' employes as a front."
On May 25 and June 30, 1982, First Jersey employes, spouses and associates from all over the country made individual $1,000 contributions -- the legal maximum -- totaling at least $175,000, Dingell wrote. In an interview with his subcommittee staff, one former First Jersey salesman said he had been invited to contribute to the Bell campaign and promised reimbursement by his branch manager, his letter stated.
Dingell's letter notes that similar information was provided to the U.S. attorney in New York more than a year and a half ago. Expressing concern over the adequacy of the SEC's handling of its First Jersey investigation, he asked whether the Justice Department would object if the subcommittee held public hearings on the matter.
In response, Assistant Attorney General John R. Bolton wrote Dingell on Feb. 24, asking him to put off hearings on First Jersey "in the near future" and promising to advise the subcommittee on the results of the Justice inquiries. He did not refer to a grand jury investigation.
The source of First Jersey's steady growth -- and of its troubles with the SEC -- is a group of small, little-known companies whose stock sells for a few dollars a share, or less. According to the SEC's October complaint, Brennan typically selects the companies himself, and then the stock is aggressively sold by First Jersey's 1,200 sales representatives.
First Jersey often acts as a retailer of these stocks, the SEC said, first buying the stock itself and then reselling to its customers, who may have difficulty finding independent price quotations because relatively few shares are traded.
The SEC alleged that this retailer's role gave First Jersey the opportunity to manipulate prices and sales markups for its own profit, charges Brennan repeatedly has denied.
In a series of lengthy articles this week, the Inquirer reported that First Jersey over the years has chosen 39 companies for underwriting -- helping them raise money by buying their stock and reselling it to public investors.
SEC records show that eight of these 39 companies never have enjoyed a profitable year, 22 have had spotty records of profitability and nine have been consistently profitable, the Inquirer reported Monday.
Brennan said that record was nothing to apologize for, given the kinds of companies on which First Jersey concentrates. "Taken over a 12-year period, most of which was in a declining market, to me that is not surprising . . . " he said.
"I'm not saying we've had a perfect record for 12 years," Brennan said. " . . . [But] out of 10 millions of transactions, First Jersey has never been found to have violated any securities laws."