Atlanta Securities Lawyer Gregory Bartko Sentenced to 23 Years for Securities Fraud

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Gregory Bartko, a securities lawyer and Atlanta resident, was sentenced last Wednesday in the U.S. District Court for the Eastern District of North Carolina to 23 years' imprisonment for securities fraud, as reported in the Columbus, Indiana, Republic. Bartko was convicted in 2010 at the conclusion of a 13-day trial on six counts of securities fraud for engaging in a scheme to defraud investors. The scheme targeted approximately 200 investors in 21 states. Bartko converted approximately $3.3 million in investor funds to his personal use. Many of the investors targeted were church members who were told false statements regarding the safety of the investments and the returns.

The prosecution had requested that Bartko be sentenced to 90 years. John K. Colvin, a Tennessee businessman, was also convicted and sentenced to 25 years.

Securities Fraud Charges Filed Against Children's Clothing Company Executive

Securities fraud, false financial statement and false entries charges were filed in Atlanta on Tuesday against Joseph Pacifico and Joseph M. Elles regarding their roles in accounting irregularities at the children’s clothing company, Carter’s Inc., which is based in Atlanta.

Pacifico, the number two executive at Carter’s Inc., is accused of hiding a multi-million dollar fraud by signing false documents, lying to members of senior management and causing Carter’s to materially misstate its net income in publicly filed financial statements.


Elles had previously been indicted in September 2011 in an indictment alleging the same charges in addition to mail and wire fraud. Pacifico’s charges were folded into the charges with Elles in a Superseding Indictment.


This case falls under the President’s Financial Fraud Task Force and is being investigated by the FBI.

Atlanta Man Indicted in New York for Securities Fraud, Insider Trading

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Scott Allen, of Atlanta, was charged last week with securities fraud and insider trading in the U.S. District Court Southern District of New York, according to the Wall Street Journal. The government alleges that Mr. Allen and John Bennett of Norwalk, Connecticut, conspired to make more than $2.6 million in profits on insider trades of pharmaceutical stocks. Mr. Allen was a former employee of Mercer, a gloabl human resources consulting firm, and Mr. Bennett was an independent film producer and stock trader. The criminal complaint against the defendants charges that Mr. Allen allegedly obtained information regarding acquisitions by pharmaceutical companies in 2008 and 2009, and gave the information to Mr. Bennett. Mr. Bennett is charged with using the information to make $2.6 million in trades, while paying Mr. Allen $100,000 in kickbacks.

For exceptional criminal representation, drawing on decades of Federal prosecutorial and defense experience, contact Gillen Withers & Lake LLC.

Conversion Solutions Holdings CEO of Adairsville, GA, Arrested in Provo, UT, After Fleeing Trial

After a five-day nation-wide manhunt, Rufus Paul Harris, former CEO of Conversion Solutions Holdings Corporation (CSHC), originally of Adairsville, Georgia, was arrested on Sunday  by the U.S. Marshal's Service in Provo, Utah. According to the Rome News-Tribune, Harris fled Atlanta on May 23 following the eighth day of his jury trial for conspiracy, fraud and falsifying financial statements in the U.S. District Court for the Northern District of Georgia in which Harris was representing himself.  The charges against Harris were based on an alleged "pump-and-dump" scheme in which Harris and others allegedly inflated CSHC's stock prices by false claims and financial statements and defrauded investors out of millions.

Harris was convicted in absentia and will be sentenced on August 18, and will face a potential 25 years' imprisonment. 

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Michael Lauer, Former Head of Lancer Management Group, Acquitted on All Counts in One of the Alleged Largest Hedge Fund Frauds in U.S. History

Michael Lauer, former chief of Lancer Management Group, a multimillion dollar hedge fund, was acquitted by a jury last week in the U.S. District Court of the Southern District of Florida on securities fraud and other charges that he allegedly defrauded investors of $200 million, according to the Miami Herald. The acquittals came following a six week long trial, in a case which the Securities and Exchange Commission had termed one of the largest alleged hedge fund frauds in the history of the United States. Lancer manager Martin Garvey was also acquitted on all charges. Lauer had faced up to 25 years in prison if convicted on the charges.

The prosecution had alleged that Lauer and others allegedly illegally manipulated stock prices in shell companies to fraudulently inflate the returns to the Lancer hedge fund. Lauer and his counsel defended that Lauer had become involved with a shady consultant who caused the losses to the fund. He addressed the press following his acquittal, stating that nothing illegal had taken place. One juror asked to comment following the verdict stated that the government had failed to prove any criminal wrongdoing.

Three other Lancer employees had previously pled guilty to fraud charges. The SEC obtained a $62 million judgment against Lauer in 2009 based on alleged unlawful gains. Lauer was represented at trial by a court-appointed attorney after having declared personal bankruptcy.

Virginia "Free-Riding" Stock Schemer Sentenced for Multi-Million Dollar Fraud

The U.S. Attorney's Office for the Northern District of Ohio announced last week the sentencing of Vriginia resident Sean M. Daly to 41 months imprisonment after Daly pled guilty to one count of securities fraud. The government alleged that, from 2001 through 2007, Daly engaged in a "free-riding" scheme to purchase stocks. "Free-riding" occurs where a purchaser of stocks places an order for stocks but has insufficient funds to cover the purchase price and instead uses the proceeds from the sale of the stock to cover the purchase. Free-riding schemes attempt to profit from short term changes in prices.

Daly ordered millions worth of securities through the accounts, using the names of nonexistent clients or corporations. He would monitor the price of the stocks during a three-day waiting period, and would refuse delivery of any stocks which had decreased in value, falsely claiming that he was waiting on an overseas client to make payment. Daly also issued false press releases and financial analyses to promote certain stocks which he had placed orders for in order to artificially increase their prices.

The scheme involved accounts with seven broker-dealers: KeyBanc Capital Markets, Inc.(f.k.a. McDonald Investments, Inc.), Dain Rauscher, Inc. (n.k.a. RBC Dain Rauscher, Inc.), Ryan Beck & Co., Inc. (n.k.a. Stifel Nicolaus & Co.), Jesup & Lamont Securities Corp., Jeffries & Company, Inc., Raymond James & Associates, Inc., and Robert W. Baird & Co. Daly also used trading accounts in various company names at National Financial Services, Goldman Sachs Execution & Clearing, LP, Charles Schwab, and Lloyds of London Market Services. 

Daly's scheme was discovered after he was unable to pay for 250,000 shares of stock in Decker Outdoor Corporation which he purchased through McDonald Investments, Inc., causing a loss to McDonald of $1,013,272.56 when it was forced to liquidate the stock.

The Court ordered Daly to pay $5.7 million in restitution. 

Former Brocade CEO Greg Reyes Sentenced to 18 Months; Counsel Blames Lawyers for Failure to Catch Stock Option Backdating

From, the former Chief Executive Officer of Brocade Communications Systems, Inc., Gregory Reyes was sentenced to 18 months in prison yesterday in U.S. District Court for the Northern District of California for securities fraud and backdating stock options. The government had sought a 37 month sentence and a loss amount of $137 million.

Reyes' counsel attempted to argue that his lawyers should have done a better job in advising Reyes. U.S. District Judge Charles Breyer apparently found the argument an interesting one, stating "Yes, it's not a bad question to ask, 'Where were the lawyers?'" However, the Court rejected the argument, finding that Reyes was a sophisticated executive who understood what he was doing.

Reyes was first tried and convicted on the charges in 2006 and was sentenced to 21 months' imprisonment. However, the Ninth Circuit Court of Appeals reversed his conviction last year based on prosecutorial misconduct in interfering with witness testimony. Reyes was tried a second time in February and March of this year, and was convicted on nine counts. During the trial, Reyes' counsel blamed Brocade's outside counsel, attorneys with the law firm of Wilson Sonsini Goodrich Rosati, for failing to catch stock option backdating. However, Reyes' trial counsel never called anyone from the firm to testify. One of the documents at issue in the case was drafted by two experienced attorneys.

The Court received over 400 letters on Reyes' behalf.

The Government Goes After Wall Street Over the Financial Crisis, Morgan Stanley Now Under Investigation for "Dead President" Deals

 As reported in the Wall Street Journal and virtually everywhere else, Morgan Stanley has joined Goldman Sachs as the latest target of the federal government's criminal investigation of financial firms relating to the financial crisis which began in 2007, under the government's theory of criminality of failing to disclose to investors that the firms were "betting" on the failure of certain collateralized debt obligations, or CDOs. According to Federal prosecutors, Morgan Stanley designed CDOs, while at the same time Morgan Stanley's trading desk allegedly placed bets that their value would decrease. Similar to the government's investigation of Goldman Sachs, the investigation, headed by the U.S. Attorney's Office for the Southern District of New York, is focusing on whether Morgan Stanley made proper representations to investors about its role.

The investigation has focused in particular on two investments created in 2006, named after former U.S. Presidents James Buchanan and Andrew Jackson, known as the "Dead Presidents" deals by traders. Each deal issued approximately $200 million in bonds. Morgan Stanley did not market the deals to customers--the Jackson deal was underwritten and marketed by Citigroup and the Buchanan deal was underwritten and marketed by UBS AG. Citigroup has stated that it is cooperating with the government in the investigation.

However, as in the investigation of Goldman, prosecutors face an uphill climb against numerous obstacles and defenses. Morgan Stanley did make money on its "Dead Presidents" deals, however it lost $9 billion overall on mortgage-backed securities in 2007. Morgan Stanley has informed the media that it did not mislead investors, and that it has examined the "Dead Presidents" transactions and that it does not believe that the investigation has any substance. The allegations are based on documents which Morgan Stanley voluntarily provided to the U.S. Securities and Exchange Commission in response to a subpoena. 

Both the Goldman and Morgan Stanley criminal investigations were the result of a civil fraud investigation of a dozen Wall Street firms begun by the SEC in 2009. Analysts have stated that all Wall Street investment banks have been receiving subpoenas about CDOs and CDO marketing. The SEC has been inquiring with firms regarding whether any of their clients were betting against CDOs.

TARP Inspector General Investigations January 2010

Well, first of all, even if you like the Colts and Peyton Manning (I do), you still have to be happy for the Saints and the City of New Orleans. What a great American story.

Back to business though, the Troubled Asset Relief Program Inspector General (TARP IG), Neil Barofsky, announced in his January 20, 2010 report that TARP has continued to develop into a sophisticated white-collar investigative agency. Through December 31, 2009, TARP has opened 86 and has 77 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations.

The Inspector General (IG) highlighted three current investigations. First, the IG remarked that Omni National Bank (“Omni”) a national bank headquartered in Atlanta with branch offices in Birmingham, Tampa, Chicago, Fayetteville, N.C., Houston, Dallas, and Philadelphia continued to be under scrutiny. Omni failed and was taken over by the Federal Deposit Insurance Corporation (“FDIC”) on March 27, 2009. Prior to its failure, Omni had applied for but had not been approved for TARP funds. TARP has participated in several investigations concerning Omni that have led to criminal charges as part of a mortgage fraud task force that includes TARP, the U.S. Attorney’s Office for the Northern District of Georgia, the Office of the Inspector General of the Federal Deposit Insurance Corporation (“FDIC OIG”), the Office of the Inspector General of the Department of Housing and Urban Development (“HUD OIG”), the Federal Bureau of Investigation (“FBI”), and the U.S. Postal Inspection Service.

TARP, the IG noted continues to play a significant role in the investigations by the Office of the New York Attorney General, the U.S. Attorney’s Offices for the Southern District of New York and Western District of North Carolina, the Securities and Exchange Commission (“SEC”), and the FBI into the circumstances of Bank of America’s merger with Merrill Lynch and its receipt of additional TARP funds.

And, finally, as previously reported, in August 2009, TARP, along with the FBI, FDIC OIG, and HUD OIG, conducted search warrants at the offices of Colonial Bancorp and Taylor, Bean & Whitaker (“TBW”). On December 16, 2009, TBW consented to its debarment from participating as an originator of Federal Housing Administration (“FHA”)-insured mortgages. HUD also terminated TBW as a Government National Mortgage Association (“Ginnie Mae”) issuer of mortgage-backed securities and took control of TBW’s $25 billion Ginnie Mae portfolio. In conjunction with the suspensions, HUD also proposed debarments of two officers of TBW. On August 7, 2009, Colonial reported that it is the target of a criminal probe. The investigation, the IG noted is ongoing.

The federal government’s enormous investment of monies into the TARP program and the establishment of the TARP IG, means a continued focus on financial crimes in the future.

Comverse Technologies Enters Into $255 Million Settlement Over Backdating of Stock Option Awards; Convicted Former General Counsel Fights On

As reported by, New York-based Comverse Technology, Inc., the worlds largest manufacturer of voice mail software, has entered into a $225 million settlement in a class action brought against it stemming from a backdating scandal. William Sorin, Comverse's former general counsel, and Comverse's former CEO, Jacob "Kobi" Alexander, were charged by the SEC and Federal prosecutors in 2006 with fraudulenty changing the grant dates of stock option awards from 1998 to 2000. In all, Sorin realized $14 million in profits from stock options, approximately $1 million of which was due to backdating. Sorin pled guilty in the U.S. District Court for the Eastern District of New York to conspiracy to commit securities fraud, mail fraud and wire fraud in 2006, and has already served his sentence of a year and a day in prison. Alexander an Israeli citizen, fled to Namibia to avoid prosecution.

Plaintiffs brought a derivative actions against Comverse in New York Federal and State courts based on the backdating. Alexander has agreed to pay $60 million and Sorin has agreed to pay $1 million to fund the settlement. In exchange, Comverse will drop its lawsuit against the former executives, who will also drop their counterclaims against the company.  The company earlier settled claims relating to the improper backdating and other accounting problems with federal regulators.

Sorin had previously entered into a settlement with the SEC, agreeing to pay $3 million in fines. However, his attorneys have asked the Court to vacate the SEC settlement and judgment, claiming that Federal prosecutors violated promises they made as part of his plea deal. Sorin claims that prosectors agreed not to object to his request to avoid jail time when he agreed to plead guilty to criminal charges and pay the SEC $3 million to settle civil charges, however he alleges that the government reneged on its promise and opposed his request at sentencing.

Florida Executive Sentenced in $10.5 Million Embezzlement Scheme

Although it may be considered small change when compared with the fraud of fellow Floridian Scott Rothstein, according to an FBI press release, Gary Ernest Williams, former Chief Financial Officer for Marian Gardens Tree Farm (MGTF) in Groveland, Florida, was sentenced to eight years imprisonment on Monday in the U.S. District Corut for the Middle District of Florida. Williams was charged with embezzling approximately 10.5 million from MGTF since 2000 through falsified checks, use of a credit card in the company's name and making large cash withdrawals which he told bank officials were to be used to pay “employee bonuses.” Willams spent the money on lavish homes, luxury cars, jewelry, drugs, and vacations by private jet. He also failed to failed to pay federal income taxes in the amount of $3,675,000 on the illegally obtained funds.

Williams entered a guilty plea in July. The District Court ordered Williams to pay more than 14 million in restitution to MGFT and to forfeit homes in North Carolina, Pennsylvania and the Bahamas.

Fort Lauderdale Attorney Scott Rothstein Pleads Not Guilty to Information Alleging $1.2 Billion Dollar Ponzi Scheme


In response to allegations uncomfortably similar to those against former New York celebrity lawyer and arch Ponzi-schemer Marc Dreier, Fort Lauderdale attorney Scott Rothstein, head of Rothstein, Rosenfeldt and Adler, P.A., appeared in response to a criminal information in the U.S. District Court for the Southern District of Florida on Tuesday. The information charges Rothstein with one count of Racketeering Conspiracy, in violation of 18 U.S.C. § 1962(d); one count of Money Laundering Conspiracy, in violation of 18 U.S.C. § 1956(h); one count of Mail and Wire Fraud Conspiracy, in violation of 18 U.S.C. § 1349; and two counts of Wire Fraud, in violation of 18 U.S.C. § 1343, as well as criminal forfeiture, U.S. v. Rothstein, 0:09-cr-60331-JIC.

According to the criminal information, available here, from about 2005 through November 2009, Rothstein, and other “known and unknown” unnamed co-conspirators, allegedly unlawfully obtained approximately $1.2 billion from investors through a Ponzi scheme (outdoing even Dreier’s scheme). The Government alleges that Rothstein used false statements, documents and computer records to induce investors to loan money to alleged borrowers based upon fraudulent and fictitious promissory notes and bridge loans. Rothstein allegedly falsely informed investors that his law firm, Rothstein, Rosenfeldt and Adler, P.A.’s, clients requested short-term financing for undisclosed business deals and that the clients were willing to pay high rates of return for loans negotiated by Rothstein.

Rothstein also allegedly told investors that they could purchase at a discount confidential settlement agreements in sexual harassment and whistleblower cases in amounts ranging from hundreds of thousands of dollars to millions of dollars. Rothstein allegedly falsely represented that the settlement agreements would be repaid to the investors at face value over time. Rothstein allegedly represented to investors that the settlements were highly confidential in order to protect the reputations of the companies and executives involved; that the plaintiffs preferred to settle the claims rather than purse them in a public forum; that Rothstein, Rosenfeldt and Adler, P.A., would disburse the investors’ funds to the plaintiffs; that the firm would make payments to the investors pursuant to the payment schedules in the alleged settlement agreements; that the funds were maintained in designated trust accounts for the investors in accordance with the rules and regulations of the Florida Bar and were verified by independent sources, as well as numerous other alleged false statements regarding the settlement agreements, investment funds and the firm.

To effect the fraud, Rothstein allegedly established numerous trust accounts in Rothstein, Rosenfeldt and Adler, P.A.’s name; falsified statements from financial institutions and manufactured online banking information allegedly showing investors’ monies; created false and fictitious settlement agreements and other documents. Among the alleged false and fictitious documents was a court order in a case, purportedly signed by a Federal District Judge, which falsely alleged that Rothstein, Rosenfeldt and Adler, P.A.’s clients had prevailed in a lawsuit and were owed $23 million, when in fact the firm had settled the case without the clients’ knowledge and had obligated them to pay $500,000 to the defendant.

The information also alleges that Rothstein allegedly falsely told clients that, in order to recover funds, they had to post bonds to be held in Rothstein, Rosenfeldt and Adler, P.A.’s trust account. Over several years, clients wired approximately $57 million to a trust account controlled by Rothstein. Rothstein allegedly created another false Federal court order to conceal the scheme, providing that the funds were to be returned to the clients by a later date.

Rothstein used the funds acquired through the alleged scheme to fund the operations of Rothstein, Rosenfeldt and Adler, P.A., and to expand the firm. The firm grew to employ approximately 70 attorneys. Rothstein is alleged to have laundered the funds from the scheme through corporations, contributions and large bonuses and gifts to employees. The information alleges that Rothstein used the funds to make contributions to Federal, State and local political candidates in a manner designed to conceal the source of the funds and to circumvent Federal and State limits on campaign contributions; for charitable donations; to purchase controlling interests in restaurants in South Florida; and to hire members of local law enforcement to provide security for Rothstein, Rosenfeldt and Adler, P.A., and for Rothstein personally.

The enormous wealth amassed by Rothstein through the alleged scheme is apparent in the Governement’s forfeiture allegations, which seek forfeiture not only of a sum of $1.2 billion, but also of 24 properties in Fort Lauderdale, Lauderdale by the Sea, Boca Raton, Hollywood and Plantation, Florida; New York City and Narragansett, Rhode Island, including Rothstein’s 10% ownership in the Miami Beach mansion of late fashion mogul Gianni Versace, “Casa Casuarina.” Forfeiture is also sought of numerous business interests, bank accounts and jewelry, as well as 24 vessels and vehicles purchased by Rothstein, including a 55 foot yacht.

The Government also lists millions in political and charitable contributions by Rothstein which it seeks forfeiture of, including contributions to the Republican Party of Florida; Florida Governor Charlie Crist; Democratic Chief Financial Officer Alex Sink, who is running for governor; and two hospitals.

As reported in the Miami Herald here, and here, Rothstein started Rothstein, Rosenfeldt and Adler, P.A., in 2002 as an obscure attorney practicing employment law. Over the next six years, his net worth grew from about $160,000 to tens of millions. Rothstein used flashy wealth and connections in the Broward County social and business communities to lure wealthy persons to invest in his schemes. He befriended the rich and famous, including NFL Hall of Famer Dan Marino

George G. Levin, a wealthy Fort Lauderdale resident and hedge fund manager, gave $656 million to Rothstein to invest in settlements purportedly worth $1.1 billion. Levin helped Rothstein market investments in employment and sexual harassment lawsuits to investors, although he is not alleged to have been complicit in Rothstein’s crimes. Another of Rothstein’s clients, car-dealership mogul Ed Morse, claims that Rothstein defrauded him of $57 million, arising from the settlement of a contract dispute with an interior decorator.

Rothstein would allegedly give large bonuses to employees of Rothstein, Rosenfeldt and Adler, P.A. on the condition that they make campaign contributions to political candidates who Rothstein would specify. The Government has stated that the recipients of the political contributions have returned the contributions. The Florida Democratic Party has returned $200,000 and the Florida Republican Party has given back $150,000. After Crist won the Governor’s race in 2006, he appointed Rothstein to a panel which nominates Broward County judicial candidates. The Florida Democratic Party has called for an investigation of Crist. Rothstein also allegedly paid gratuities to local law enforcement officers to avoid scrutiny.

Rothstein’s scheme began to unravel over Halloween weekend, when investors began calling the firm for overdue payments and discovered the fraud. Rothstein fled to Morocco in October, taking $400,000 to $500,000 in cash with him and wiring $16 million to Casablanca. Rothstein reportedly sent e-mails to members of his firm that he was contemplating suicide, but he returned to the U.S. on a private jet in early November. He met with Federal authorities and provided details regarding his Ponzi scheme. FBI and IRS agents raided Rothstein, Rosenfeldt and Adler, P.A.’s law offices, and seized Rothstein’s real and personal property. Rothstein agreed to waive indictment, an indication that he is cooperating with the Government, although Rothstein’s counsel has denied that he has any deal with the Government.

The Government’s information does not name Rothstein’s alleged co-conspirators, however news reports suggest members of Rothstein's inner circle at the law firm, and officers at Toronto Dominion Bank, where the investor trust accounts were held.

Rothstein’s alleged Ponzi scheme has been called the largest in the history of South Florida by Federal officials. The Florida Bar has disbarred Rothstein for stealing from the firm’s trust account. Rothstein, Levin and TD Bank are also being sued by a group of investors for more than $100 million.

Rothstein appeared in court on Tuesday in casual attire with a confident demeanor and pled not guilty to the information. U.S. Magistrate Judge Robin Rosenbaum ordered Rothstein jailed pending trial based on Rothstein’s flight to Morocco. Rothstein is represented by attorney Marc Nurik, oddly of Rothstein, Rosenfeldt and Adler, P.A. He faces up to 100 imprisonment if convicted.


Government Drops All Charges Against Former Reagan Budget Director David Stockman


While prosecutorial authorities often take an “indict first, examine all the evidence later” approach, it is refreshing—and rare—when prosecutors can admit when thorough evaluation of the evidence, or additional evidence, does not bear out their initial allegations of criminal activity, instead of choosing to press forward to obtain a criminal conviction at all costs, under any theory or pretext. The U.S. Attorney’s Office for the Southern District of New wins Federal Criminal Defense Blog’s “man/woman enough to admit we were wrong” award. As reported in the Associated Press  and the New York Times, on Friday, the U.S. Attorney’s Office dropped all charges against former Reagan administration Budge Director David Stockman, 62, after a “renewed assessment of the evidence” in the case and information learned after his indictment. Stockman had been charged in March 2007 with conspiracy to commit securities fraud, to make false filings with the Securities and Exchange Commission, to falsify books and records, to lie to the auditors, to commit wire fraud, to commit bank fraud and to obstruct justice. Lev Dassin, the acting United States attorney for the Southern District of New York, issued a statement on Friday stating that “the government has concluded that further prosecution of this case would not be in the interests of justice.”


The allegations arose from Mr. Stockman’s position from 2003 to 2005 as CEO and director of Collins & Aikman, a manufacturer of auto interiors, carpets, acoustics, fabrics and convertible tops based in Southfield, Michigan. Prosecutors had alleged that Mr. Stockman allegedly manipulated Collins & Aikman’s earnings reports to hide its financial trouble. Collins & Aikman entered bankruptcy in May 2005, another casualty of the economic woes of the U.S. auto industry. Collins & Aikman officers J. Michael Stepp, David R. Cosgrove and Paul C. Barnaba were also charged in the indictment. Stockman was released on $1 million bail. He maintained from the beginning that he had done “absolutely nothing wrong, except to help save this company from a very dire circumstance.” Mr. Stockman joined Collins & Aikman after a firm that he co-founded, Heartland Industries Partners, bought a controlling stake in the company. Mr. Stockman and Heartland lost $360 million in the collapse of Collins & Aikman. The company forced Mr. Stockman to resign in May 2005.


Mr. Stockman’s attorney, Elkan Abramowitz, said he was grateful for the government’s decision and that the defense was confident that Mr. Stockman would eventually be vindicated since he had committed no crime.


Mr. Stockman was Reagan’s Budget Director from 1981 to 1985. He complained that he was blackballed by the White House for calling Reagan’s tax cuts a “Trojan Horse” for lowering taxes on the rich.


Dallas Mavericks Owner in Hot Seat Over Insider Trading

The Securities and Exchange Commission has sued billionaire and owner of the Dallas Mavericks Mark Cuban for alleged insider trading, as reported by the Atlanta Business Chronicle. The SEC alleges that Cuban sold 600,000 shares of, Inc., a Canadian Internet search engine, in June 2004, based upon information about a pending stock offering which had not been made public. The SEC alleges that Cuban knew that the stock offering would be done at a discount price, and would dilute the stakes of existing shareholders in the company. Cuban is alleged to have avoided a loss of more than $750,000 by selling his shares in less than 4 hours after he learned of the impending offering. The SEC is seeking to bar Cuban from further violations, disgorgement of any gains and an unspecified penalty.

Cuban started the company MicroSolutions in Dallas in the 1980s and sold the company in 1990 to CompuServe for $6 million. Cuban then partnered with a college friend and started a company called Audionet, which eventually became and was purchased by Yahoo in 1999 for $5.9 billion in Yahoo stock. Cuban is currently listed as #133 on Forbes' list of the "World's Richest People," with a net worth of $2.8 billion.


Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.