As you know from Gary Stoller's articles, the J. Morton Davis firm of DH Blair issued the IPO for Interactive Flight Technology who created and manufactured the entertainment system (IFEN) that caused swissair 111 to crash. In Gary's article it said that Blair tried to bribe Edward Mlynarczyk (designated engineering representative for the FAA) by offering him stock, into giving his approval for certification of the IFEN despite his misgivings with it. Of course no charges have been lodged-go figure. Here is a review that someone posted on Amazon.com about one of J. Morton Davis' books.

Gary Stoller's article:

http://www.usatoday.com/money/biztravel/2003-02-16-swissair-investigation_x.htm

Review in Amazon by a reader:


Careful, this con-mans firm was shut down by the SEC, June 21, 2004 Reviewer: A reader


According to published articles, D. H. Blair & Co. was a training ground for the "pump and dump.
In this strategy, prices for an IPO are artificially "pumped" by a group of brokers who control the shares by creating demand selling to each others' customers in a closed artificial market. Once the price increased, the insiders dump while the unsuspecting retail clients are aggressively encouraged to hold their shares and not sell. After the insiders have dumped their shares, the cold calling stops and because there is no longer support for the price, the shares free-fall as the brokers move onto the next issue.

On March 7, 2002, in an action before the Supreme Court of the State of New York, County of New York, Blair pled guilty and was convicted of three counts of violating the Martin Act-the New York state securities law
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Manhattan District Attorney Robert M. Morgenthau announced today the stock fraud indictment of securities firm D.H. BLAIR & CO., INC., and fifteen of its officers and employees for enterprise corruption. Included among those indicted are KENTON WOOD, the Chairman of the firm; ALAN STAHLER and KALMAN RENOV, the firm's Vice Chairmen; VITO CAPOTORTO, the head trader of the firm; ALFRED PALAGONIA, the top-producing broker for the firm; and ten other Blair brokers. In addition, three other former D.H. Blair brokers have pleaded guilty to felony charges arising from this investigation.

The sixteen defendants have all been indicted for Enterprise Corruption, Scheme to Defraud in the First Degree, and securities fraud in violation of the New York State General Business Law. The Grand Jury alleged additional pattern acts, including perjury and violation of New York's antitrust law. Various defendants were also indicted for Grand Larceny in the Third Degree and Falsifying Business Records in the First Degree. The Enterprise Corruption charge, which is punishable by up to twenty-five years' imprisonment, alleges that managers and stockbrokers at D.H. Blair ran the business as a criminal enterprise.

The 173-count indictment charges that the defendants participated in the "D.H. Blair Criminal Enterprise" from 1989 through 1998, and that the members of the scheme defrauded numerous people - including their own customers, other investors, other brokerage firms, and securities regulators - in order to realize massive illicit profits. Members of the D.H. Blair Criminal Enterprise conspired to commit, and did commit, a variety of crimes to advance their common criminal purpose. They manipulated stock prices -- including securities being offered in initial public offerings ("IPOs") -- for the benefit of the firm, certain favored customers, stockbrokers, and other people associated with D.H. Blair. They engaged in a wide range of illegal and high-pressure sales practices to generate excessive commissions and to facilitate the manipulation of stock prices. In addition, they illegally colluded with other securities firms to manipulate stock prices. They fraudulently increased commissions by selling securities to customers at far more than prevailing market prices. They increased the size of the firm's customer base by trafficking in client information stolen from other firms and by opening accounts for customers whom they knew were not suitable for the kind of high-risk securities marketed by D.H. Blair.

More than 50,000 customers invested with D.H. Blair & Co., Inc. during the period of the existence of the D.H. Blair Criminal Enterprise. Many suffered severe economic losses as a result of the criminal conduct of the enterprise. For example, a 56 year-old disabled man from Colorado lost approximately $150,000 from a disability settlement upon which he relied to pay for medicine and other living expenses; he was given false price predictions and so-called "inside" information which did not pan out. Another investor, a 63 year-old disabled racetrack worker living on a fixed income in Manhattan, lost $35,000 of a $38,000 IRA due to unauthorized purchases in her account and refusals to sell. A tugboat pilot from Brooklyn lost the $45,000 she had saved to buy a house; while she was at sea, unauthorized trades were made in her account and when she complained she was falsely assured that she would be the recipient of windfall future profits. Another Blair customer, a 70 year-old Florida resident who had retired as a trumpet player for the New York Philharmonic, lost approximately $250,000 from his IRA and trust accounts due to false price guarantees and high pressure tactics designed to prevent him from selling.

D.H. Blair made large profits by fraudulently distributing and manipulating the securities of companies that had been brought public by its associated investment banking firm. In 1996, for example, the brokerage firm made gross profits of over $85 million from such over-the-counter securities trading. The indictment charges that among the IPOs that the D.H. Blair Criminal Enterprise fraudulently sold and manipulated were Amerigon, Inc., Telepad Corp., Premier Laser Systems, Inc., Interactive Flight Technologies, Inc., Sepregen Corp., Food Court Entertainment Network, Inc., Titan Pharmaceuticals, Inc., Digital Video Systems, Inc., Conversion Technologies International, Inc., and Advanced Aerodynamics and Structures, Inc.

In order to commit these crimes and evade detection, members of the D.H. Blair Criminal Enterprise falsified business records, suppressed customer complaints, hid illegal practices, gave false and evasive testimony, and otherwise misled regulators charged with enforcing the laws and rules governing the securities industry, including the United States Securities and Exchange Commission ("SEC") and the National Association of Securities Dealers ("NASD")..

http://www.amazon.com/exec/obidos/tg/detail/-/0688153224/qid=1099194950/sr=1-1/ref=sr_1_1/103-8233795-7839069?v=glance&s=books

This message has been edited. Last edited by: BF,

Please see Mark's comments on the front page of this site regarding D.H. Blair which he just added.