Fri November 29 2002, 11:31 PM
BFThe entertainment system IPO-DH Blair
DH Blair was the investment group who underwrote the IFT (Interactive Flight Technology) IPO. Here are some articles regarding the brokerage firm DH Blair. As most of you know, IFT was the company that created and manufactured the IFEN (entertainment system) that last I heard was still suspected as a possible cause of the sr111 crash.
D.H. Blair brokerage, ex-employees indicted on 173 counts of stock fraud By Colleen
Debaise
DOW JONES NEWSWIRES NEW YORK, July 27 — D.H.
Blair & Co.’s retail-brokerage unit and 15 of its
officers and employees have been indicted on stock-fraud
charges, two years after the unit ceased
operations. Among the IPOs that Blair fraudulently sold were
Amerigon Inc. (ARGN), Telepad Corp., Premier Laser Systems
Inc., Interactive Flight Technologies Inc., Sepragen
Corp. (SPGNA), Food Court Entertainment Network Inc.,
Titan Pharmaceuticals Inc. (TTP), Digital Video Systems
Inc. (DVIDE), Conversion Technologies International
Inc. and Advanced Aerodynamics & Structures Inc.
(AASI), according to the indictment. See Full
Article at
http://www.msnbc.com/news/438541.asp#BODY (link no longer works)
There were about 51 security holders that held
stock with IFT around the time the IPO was issued. Most
were not listed as being involved with other
Blair-underwritten companies. A source has provided me with a
short list of those initial investors in IFT who have
been involved in other Blair under-written companies
and a biography on each one that have appeared in the
press. This list does not imply in any way wrongdoing in
regards to these individuals. -brothers Morris
Wolfson, Aaron Wolfson, and Abraham Wolfson.-E. Donald
Shapiro -Richard A. Nelson and Elaine M. Nelson -Marc
Roberts -Andrew Bressman -Leonard Keller and Eileen
Keller -Ron Cantor -Jules H. Dreyfuss -Robert A.
Foisie -Lenny Corp The biographies will follow in the
next few posts.
Morris and Abraham Wolfson: http://www.forbes.com/forbes/97/0224/5904114a.htm (Article must be purchased)
"Why
would Harriton deal with a clearly disreputable
bucket shop? Was it as a favor to Morris and Abraham
Wolfson, sons of New York real estate magnate Zev
Wolfson—developer of One State Street Plaza? Morris Wolfson has
sizable accounts at Bear, Stearns. He was also a big
player in Baron's house stocks. And Wolfson Investment had
bought $400,000 worth of A.R. Baron's privately
issued convertible preferred stock. As a special
client of Baron he would be Entitled to allotments of
hot issues before the suckers were invited in.
Bressman told people that the Wolfsons asked Harriton
to take on Baron as a clearing firm again.
Bressman told people that Harriton asked the Wolfsons if
the family would guarantee the firm. The family declined,
but Harriton took Baron back anyway. Morris
Wolfson, 38, is infamous as co-owner of a Harlem
apartment building that collapsed in 1994, killing three
people. Wolfson was not found liable for the deaths."
Joseph Morton Davis: http://securities.stanford.edu/complaints/dreyfus/98cv04318/010.html (link no longer works)
D.H. Blair & Co ("D.H. Blair"), a now defunct company
run by "penny stock king" J. Morton Davis. D.H.
Blair was notorious for boiler-room tactics such as
cold calling, overcharging customers and high
pressure sales tactics. In 1997, for example, D.H. Blair
agreed to pay $4.9 million in fines and restitution
as part of a settlement with the NASD arising out
of allegations that it overcharged customers who invested in
public offerings it underwrote. Also in 1997, D.H. Blair paid a
$25,000 fine to settle improper-trading charges
brought by the NASD. Currently, D.H. Blair is
reportedly being investigated for sales practice violations
by the SEC, federal prosecutors and a task force of
state
securities regulators.
D. H. Blair Aug 18,
1997
http://207.197.132.133/alerts/v3/ALRTV3N29.html (link no longer works)
The
September issue of Money magazine highlights the
personal financial gains of Marianne Gingrich, House
Speaker Newt Gingrich's (R-Ga) wife. Mrs. Gingrich
reportedly made a quick $5,000 from three initial
public offerings (IPO) underwritten by D.H. Blair Investment
Banking. The Money report recalled Rep. Gingrich's
outraged reaction when word spread of former House
Speaker Tom Foley's (D-Wash) use of IPOs to make a
fast profit. Gingrich asked Foley "how he made more than
$100,000…dealing in new stock issues not available to most
investors." The owner of D.H. Blair Investment, J. Morton
Davis, and his wife, Rosalind, made more than $83,000
in individual contributions in the 1996
election cycle -- including $10,000 to Gingrich's leadership
PAC, the Monday Morning PAC. Rosalind Davis gave
the Monday Morning PAC $5,000 on Oct. 25, 1996,
around the same time that Marianne Gingrich was buying
and selling stock underwritten by Davis' husband. According
to a list by Mother Jones, J. Morton Davis was
also a charter member of GOPAC when it was in
Gingrich's control and gave the group $20,000. Recently,
Davis successfully lobbied Congress to include a provision in the
tax bill benefiting investors who help support the
type of companies D.H. Blair Investment often
underwrites. The Davis family is no stranger to
the campaign finance world. In 1996, D.H. Blair & Co., a
brokerage firm partly owned by Davis' children, paid a
$100,000 penalty to the Federal Election Commission
(FEC), which alleged the company illegally
used contributor lists to solicit clients. One of the lists
requested from the FEC by D.H. Blair & Co.? Newt
Gingrich's.
Andrew Bressman http://www.sec.gov/enforce/adminact/34-42103.htm (link no longer works)
Andrew
Bressman, age 34, resides in Norwood, New Jersey.
On December 15, 1997, Bressman pleaded guilty to
and was convicted of New York State felony charges
of enterprise corruption and grand larceny in the
first degree arising from his activities as a broker and chief
executive of Baron. In his plea, Bressman admitted to
defrauding his customers by more than $1,000,000. He is
presently awaiting sentencing on those charges. From
January 2, 1990 through August 17, 1992, Bressman was
a registered representative at Blair. In August 1992, Bressman
left Blair to become a registered representative
and president of Baron. In February 1993, Bressman
became a registered principal at Baron and
in September 1993 he began serving as Baron's chief executive
officer. Bressman ceased employment with Baron in July 1996. While
employed at Baron between August 1992 and July 1996,
and while engaged in the manipulative schemes and
abusive sales practices described above, Bressman
received $6,038,412 in compensation from Baron.
Bressman's compensation arose in whole or in substantial part from the
illegal activities described
above.
A R. Baron & D. H. Blair Sept 22,
1997
http://www.nasdr.com/1420/goldsmith_02.htm In May, the Manhattan District Attorney
announced the indictment of A.R. Baron & Co., Inc. and
the arrest of 13 individuals for cheating
thousands of investors out of more than $75 million.
The individuals and the firm, which is now defunct, were charged
with participating in a pattern of criminal activity. Included in
that pattern were lying to investors to induce them to buy
certain low-priced securities; manipulating the markets in certain
micro-cap stocks to benefit themselves and their favored
customers; making unauthorized trades in the millions of
dollars; refusing to honor its customers’ directives to
sell securities in their accounts; outright thefts
from investors; and forging documents to prevent
detection of their crimes. Four NASD Regulation
examiners from our Chicago office worked closely with
the Manhattan DA throughout this important investigation.
Robert Fosie Feb 17,
1998
http://www.sec.gov/enforce/litigrel/lr15642.txt February
17, 1998, the Commission filed a
complaint in the United States District Court for the
District of Columbia against Robert Foisie ("Foisie").
The complaint alleges that Foisie, a resident of
Old Saybrook, Connecticut, failed to file thirty required forms
reporting his securities ownership with the
Commission.
J. Morton Davis http://www.forbes.com/forbes/98/0824/6204055a.htm "Morty
Davis, 69, is a Brooklyn-born Harvard hundred
million dollars. He got rich by raising money in the
private and public markets for companies that tonier
firms wouldn't touch. Since that kind of paper
is hard to sell, Davis demanded and got top dollar from
the outfits he served, collecting big fees and
getting hunks of equity in those companies.
E. Donald Shapiro was a Director on three
Blair-related companies named in the indictments alone.
Priemier Laser Systems, Telepad, and Food Court
Entertainment Network
Inc.
In an S-3 on 10/11/1996 made by Interactive
Flight Technologies: "The Company has agreed not to solicit Warrant
exercises other than through D. H. Blair Investment
Banking Corp., the underwriter of the IPO."
D.H. Blair & Co. (August 1997)
Fraudulent and
excessive markups in sixteen securities as to which the
firm dominated and controlled immediate aftermarket
trading Fines and restitution of almost $5 million
Significant fines and suspensions for the firm’s CEO and Head
Trader."
http://www.nasdaqnews.com/news/pr/invinit.html Clearing House Practices (Scroll
down until you reach
D.H.
Blair)
http://www.oag.state.ny.us/investors/microcap97/report97d.html GODFATHER IV MEETS BOILERROOM II The United States
Attorney for the Eastern District of New York has charged
that representatives of four Mafia families teamed up
with Russian mobsters in a multi-million dollar stock
scam involving several "boiler room" brokerage
firms. A four-year investigation by federal authorities
has culminated in the indictments of nineteen
individuals, including six alleged mobsters or associates of
organized crime families. The allegations focus on
activities at four brokerage firms: White Rock Partners
(later renamed State Street Capital Markets Corp.); J.W.
Barclay & Co.; A.R. Baron & Co., Inc.; and D.H. Blair &
Co. All four firms specialized in the sale of
microcap stocks.
http://www.stockpatrol.com/radar/radar2000.html A Favor to One . . .Which brings us to one
great irony in the new law. Buried deep in its bowels
(Title III, Sec. 313) is a remarkable tax break that
could provide the key to reforming the entire
system--even though it certainly wasn't meant that way. The
break was the result of the efforts of one man, J.
Morton Davis, who built the investment firm D. H. Blair
& Co., Inc., and who is well-connected in
Washington. Among other things, he owns part of the parent
company of The Hill, a newspaper that covers
Congress.
http://www.aei.org/oti/oti8079.htm D.H. Blair to refund up to $2.25M regulators say. Wednesday, October 7, 1998 By DAVID EVANS, Bloomberg
News NASHVILLE -- D.H. Blair & Co., a New
York-based penny stock underwriter that ended retail
operations in April, reached an agreement with state
regulators to set up a $2.25 million restitution fund for
customers who think the brokerage made inappropriate
trades
http://www.naplesnews.com/today/business/d408263a.htm "While at UBS, Schonberg worked closely with D.H. Blair
& Co ("D.H. Blair"), a now defunct company run by
"penny stock king" J. Morton Davis. D.H. Blair was
notorious for boiler-room tactics such as cold calling,
overcharging customers and high pressure sales tactics. In
1997, for example, D.H. Blair agreed to pay $4.9
million in fines and restitution as part of a settlement
with the NASD arising out of allegations that it
overcharged customers who invested in public offerings it
underwrote. Also in 1997, D.H. Blair paid a $25,000 fine to
settle improper-trading charges brought by the NASD.
Currently, D.H. Blair is reportedly being investigated for
sales practice violations by the SEC, federal
prosecutors and a task force of state securities
regulators."
http://www.lawssb.com/Dreyfus/complaint.htm (link no longer works)
__________________________________
Fifteen officers from the now-defunct D.H. Blair
& Co. - including its three top men - were indicted
in Manhattan yesterday for running the
problem-plagued securities firm as a corrupt enterprise.
Among those facing up to 25 years prison if convicted
are Kenton Wood, the former Wall Street firm's
chairman, and Alan Stahler and Kalman Renov, its vice
chairmen.
http://www.nypost.com/07282000/business/34020.htm (link no longer works)
EX-D.H. BLAIR BROKER GUILTY IN IPO PRICE SCAM By LARRY CELONA and DAREH GREGORIAN A stockbroker from the now-defunct
Manhattan securities firm D.H. Blair pleaded guilty
yesterday to conspiring with several brokers in a scheme to
artificially inflate IPO prices. Vincent Poliseno, 32,
pleaded guilty to securities fraud and attempted
enterprise corruption in front of State Supreme Court Judge
Bernard Fried -- the first arrest and conviction stemming
from a lengthy, sweeping investigation into corruption
charges against Blair and some of the companies it did
business with.
http://www.nypost.com/02052000/business/24186.htm (link no longer works)
_________________________________
D.H. Blair,
the booming Wall Street brokerage house,
is being investigated for allegedly defrauding
thousands of investors through manipulative sales and
trading practices, The Post has learned. As part of
the investigation, the Manhattan district attorney's
office is focusing on a team of Blair brokers whose
clients include organized-crime figures - among them,
John Gotti's son-in-law, Carmine Agnello, sources
said. The main thrust of the probe, sources
said, is Blair's financing, promotion and trading of
new stock issues that resulted in artificially
inflated prices for customers."
http://208.248.87.252/113097/1291.htm (link no longer works)
D.H. Blair And Top Officials To Pay $4.9 Million In
Fines And Restitution August 13, 1997
"The 16
securities involved were: Amerigon Corp. common stock;
Telepad Corporation units; AquaCare System units; Symbollon
Corporation units; Skyline Multimedia units; Linda’s Flame
Roasted Chicken units; Skysat Communication units;
Video Update units; U.S. China Industrial
Exchange units; Montbatten common stock; U.S. Diagnostics Labs
units; Premier Laser System units; Infosafe System
units; In-Time System units; Interactive Flight
units; and Sepragen Corporation units. There is no
suggestion that the affected companies knew of, or were
involved in these
violations."
http://www.nasdaqnews.com/news/pr/ne_section97_58.html Greed is NOT good Pump and Dump:
The Inside Story of D.H. Blair
By Timothy Harper Inside story of DH
Blair Section 1: Greed is Not Good Throughout most of the 1990s,
pretty much
everybody who worked on Wall Street knew that D.H. Blair & Co. was a brokerage
house that played
fast and loose with the rules. It was the kind of place where young brokers
could make a
lot of money fast -- especially if they weren’t bothered by ethics, or by
losing money for
their clients. Consequently, it was no surprise last month when 15
former executives
and brokers at the now-defunct D.H. Blair were indicted by the Manhattan
district attorney on charges of enterprise corruption -- a polite legal term for using a supposedly legitimate company for fraud and racketeering. What was shocking was that it
took so long for authorities to bring criminal charges against Blair’s shady practices.
The indictments against D.H. Blair and some former employees -- including the chairman, two vice chairmen, the
head trader and 11 brokers -- alleged that Blair was “a criminal enterprise” from 1989 until 1998, when it was closed. The 173-count indictment accuses Blair and its
brokers of
cheating clients out of tens of millions of dollars in a number of ways. Among
the alleged
illegal acts were stock price manipulation, insider trading, high-pressure
sales tactics,
selling shares for more than their market prices and stealing client lists from
other
brokerages.
http://netbank.onmoney.com/Editorial/Investing/harper/pump_dump_step1.html http://netbank.onmoney.com/Editorial/Investing/harper/pump_dump_step1\ http://www.nasdaqnews.com/news/pr/ne_section97_58.html http://www.nasdaqnews.com/news/pr/ne_section97_58.html http://sites.state.pa.us/PA_Exec/Securities/releases/dhblair.html http://sites.state.pa.us/PA_Exec/Securities/releases/dhblair.html http://www.nypost.com/07282000/business/34020.htm http://www.nypost.com/07282000/business/34020.htm I was wondering what happened with the indictments and this is the most recent information I was able to find:
DISTRICT ATTORNEY - NEW YORK COUNTY News Release June 5, 2001 Contact: Barbara
Thompson 212.335.9400 Manhattan District Attorney Robert
M. Morgenthau announced that a 34-year-old former
stock broker at D.H. Blair & Co., Inc. pleaded guilty
to enterprise corruption and securities
fraud. The defendant, ALFRED PALAGONIA, was a broker at D.H.
Blair & Co., Inc. from January 1990 through February
1998. The defendant was indicted in July 2000 along
with 14 other brokers and the D.H. Blair firm itself
in an indictment charging the defendants with
operating D.H. Blair as a criminal enterprise. Mr.
Palagonia is the first defendant to plead guilty arising
out of that indictment. The defendant pleaded
guilty yesterday before New York State Supreme Court
Judge Bernard Fried to one count of Enterprise
Corruption and one count of Securities Fraud in violation of
the Martin Act. The maximum penalty for Enterprise
Corruption is 25 years in prison. The defendant was
charged by the New York County District Attorney's Office
with participating in a scheme in which certain
brokers and others at D.H. Blair & Co., Inc. and other
broker/dealers conspired to manipulate and maintain the price of
securities being offered in IPOs at artificially high
levels. The illegal techniques included a variety of
fraudulent sales practices such as misrepresentations of
material facts, omissions of material facts that the
brokers were legally required to disclose, misleading
statements including unreasonable price predictions and
statements about the expected compensation to be received by
the brokers, imparting or intimating the possession
of material nonpublic information, and unauthorized
purchases of securities. The scheme benefited favored
customers of D.H. Blair & Co., Inc., including customers of
principals of the firm, who were able to sell their
securities in the aftermarket. Those securities were bought
by other, non-favored customers who were not aware
that they would not be readily able to sell their
holdings, and who later lost money when the price of the
securities dropped. Mr. Palagonia was charged with
fraudulently selling to the unsuspecting public securities
including Interactive Flight Technologies, Inc., Digital
Video Systems, Inc., and Advanced Aerodynamics and
Structures, Inc. One investor from Colorado lost
approximately $450,000 due to Mr. Palagonia's fraudulent
conduct. Today's plea is part of a continuing
investigation by the New York County District Attorney's Office
into corrupt activities in the securities industry. In
addition to Mr. Palagonia, three other former stock
brokers have pleaded guilty to attempted enterprise
corruption and securities fraud during the course of the
investigation of D.H. Blair. Assistant District
Attorneys Steve Krantz, Tom Curran and Melissa Paolella of
the District Attorney's Frauds Bureau handled the
investigation of this case under the supervision of Daniel J.
Castleman, Chief of the Investigation Division, and Owen
Heimer, Chief of the Frauds Bureau. Investigator
Christopher Donohue assisted in the investigation under the
supervision of Assistant Supervising Investigator Angel
Flores, Deputy Chief Investigator Thomas Jackson, and
Chief Investigator Joseph Pennisi. Mr.
Morgenthau thanked the United States Securities and Exchange
Commission, and the National Association of Securities
Dealers for their
assistance.
http://www.manhattanda.org/whatsnew/press/2001-06-05.htm By Gary Stoller, USA TODAY An inactive Wall Street brokerage firm, its chairman and three top
executives pleaded guilty Friday to multiple counts of securities
fraud and collusion to fix stock prices on the Nasdaq market.
The plea agreement, which averted a trial that was scheduled to begin
Monday, calls for D.H. Blair and Co. and the executives to pay $21
million to reimburse defrauded customers.
According to Manhattan District Attorney Robert Morgenthau, the
executives and 10 of their brokers who previously pleaded guilty
engaged in "a massive scheme of securities fraud" and "price
manipulation" from 1989 through 1998. During those years, D.H. Blair
and its "investment bank affiliate" brought public nearly 100 small
companies.
"Unknown to its tens of thousands of retail customers, Blair
consistently arranged to buy initial public offering (IPO) shares
from its preferred clients — often celebrities and wealthy
individuals — at a predetermined premium and resell them to its rank-
and-file clients at artificially inflated prices," Morgenthau said in
a statement. "Many of the less-favored customers were unsophisticated
investors of limited means, in some cases elderly or infirm, and
completely unsuitable for Blair's highly speculative securities."
When these customers wanted to sell their shares, they
were "aggressively discouraged from doing so," the district attorney
says.
D.H. Blair, which operated for 94 years before selling its assets in
1998, colluded with another brokerage, A.R. Baron, Morgenthau
charges. In 1997, company founder Andrew Bressman, a former D.H.
Blair employee, pleaded guilty to defrauding A.R. Baron customers of
more than $1 million from August 1992 to July 1996.
The D.H. Blair executives who pleaded guilty Friday were Chairman
Kenton Wood, Vice Chairmen Alan Stahler and Kalman Renov, and head
trader Vito Capotorto. Wood, Stahler and Capotorto face prison terms
of up to four years, and Renov faces probation, a Morgenthau
spokeswoman says.
Lawyers for Wood and D.H. Blair had no comment. Stahler and Renov
were represented by different law firms but issued the same written
statements. The two executives "took this difficult step to close a
painful chapter" in their and their families' lives and "have always
tried to be faithful" to their responsibility to their "loyal clients
and friends," the statements said.
Gary Naftalis, Capotorto's lawyer, says "Mr. Capotorto wants to get
this matter behind him so he can get on with the rest of his life."
Stahler and Renov are sons-in-law of J. Morton Davis, former D.H.
Blair chairman and current chairman of D.H. Blair Investment Banking,
which underwrote D.H. Blair's initial public stock offerings. Davis
divided D.H. Blair into two entities in 1992, retaining control of
the firm's investment banking business and transferring ownership of
D.H. Blair's retail brokerage business to Wood, his two daughters and
Capotorto.
No criminal charges have been brought against Davis, but more than 90
civil lawsuits have been filed against him, D.H. Blair and its
brokers by former stockholders who charge they were defrauded.
Davis' lawyer did not return calls for comment.
D.H. Blair officials said in a statement that the guilty pleas to
criminal charges relate only to their company "and in no way involve
D.H. Blair Investment Banking Corp."
The following names appear in INTERACTIVE FLIGHT TECHNOLOGIES INC's SEC filings: http://www.edgar-online.com/brand/yahoo/people/companypeople.asp?cik=932021