Arthur Kane, who shot and killed one Miami stockbroker and critically wounded a second Monday before killing himself, had been admitted to the U.S. Witness Protection Program because he had testified for the government in two trials, one involving stock manipulation.
Kane, 53, shot himself in the head in a Merrill Lynch office after suffering heavy losses in the stock market. Before he was given a new identity and moved to Miami in 1979, he was Arthur H. Katz, a Kansas City, Mo., lawyer.
Katz, his former law partner A. Henry Tager and several other Kansas City professionals, including at least two doctors, were indicted in 1977 in a scheme to stage accidents, fabricate injuries and submit fraudulent claims to automobile insurance companies.
David Helfrey, the former head of the federal government's Kansas City Organized Crime Task Force, said that after Katz agreed to testify for the government, the other defendants in the case pleaded guilty. Katz, as part of his deal with the government, pleaded guilty in 1978 to fraud and served six months of a two-year sentence in a federal half-way house. He also paid a $5,000 fine and was disbarred.
Helfrey said he arranged to have Katz placed in the witness program after organized-crime figures threatened Katz's life.
Ken Fulp, a spokesman for the U.S. Marshals Service, which runs the witness protection program, said Katz entered the program in July 1977 "after he cooperated with federal prosecutors in a mail- and insurance-fraud case in Kansas City." He was relocated to Florida in 1979 after his testimony in Philadelphia in the stock case.
Knight-Ridder reported yesterday that Philadelphia case involved manipulation of stock in Magic Marker Corp., manufacturer of felt-tipped pens, during a 10-month period in 1971 and 1972 when the price of a share rose from $5.25 to $31, then fell to 37 cents.
Among the 20 defendants convicted was Harry Blumenfeld of Miami Beach, identified by the Philadelphia Organized Crime Task Force as a close associate of a reputed mob figure, the late Meyer Lansky.
Thomas Monahan, Philadelphia's assistant regional administrator for the U.S. Securities and Exchange Commission, told the Associated Press that Katz's name was on one of the accounts used by the ring to buy 18 percent of Magic Marker's shares. Monahan said the hidden principals then tried to boost the stock's price by bribing reporters who write about the stock market and others.
Monahan said Katz's testimony, although not crucial to the case, helped lead to the convictions.
Tager, Katz's former law partner, told Knight-Ridder he thinks that Katz invented the death threats that reportedly followed.
When he killed himself, Katz, then known as Kane, was working as a claims representative for a Miami branch office of the Social Security Administration, earning less than $30,000 per year. But in his spare time, he made a fortune in the stock market -- at least $7 million and perhaps $15 million before the market plunged.
John Russell, a spokesman for the Justice Department, said federal officials have no reason to think that Kane used "ill-gotten" money for his investments.
Helfrey said the proceeds of the Kansas City conspiracy -- estimated at less than $500,000 split among several participants -- would not have been enough to fund his market ventures. "But I'm sure that it was not all his own money. He must have been investing for others," Helfrey said.
Although most newly relocated witnesses receive a monthly stipend from the marshals, Fulp said Kane was self-supporting from the start.
He "did not have a violent past and had not, to the best of our knowledge, committed any crimes while he was in the witness security program," Fulp said, adding that the marshals had had little contact with Kane in recent years because of his "successful adjustment."
One of Kane's victims, Merrill Lynch vice president Jose F. Argilagos, 51, was buried yesterday. The other, Lloyd Kolokoff, 39, remained in critical condition with a damaged spine.