Commodities Salesmen Plead Guilty to Fraud
CHICAGO (AP) _ Three former salesmen for a failed commodities trading firm have pleaded guilty to charges they participated in a scheme to defraud investors of $3.2 million.
Carl H. Bertrams, 32, Richard K. Shelhamer, 39 and George Y. Ayling, 37, each pleaded guilty Thursday to two counts of mail fraud and agreed to cooperate in a continuing investigation of First Commodities Corp. of Boston.
The three entered their pleas before U.S. District Judge Nicholas Bua. They each face a maximum penalty of 10 years in prison and a $2,000 fine.
Assistant U.S. Attorney Michele Smith said she expected a grand jury to soon indict several managers and salesmen who worked in First Commodities offices in Chicago and suburban Oak Brook between 1983 and 1987.
In their guilty pleas, the defendants said they sold commodity investments over the telephone by following a set script that downplayed risk and exaggerated profit potential.
While salesmen stressed the urgency of making an investment before an impending price increase, new clients who sent in personal checks had their funds stored temporarily in spread positions that limited the risk to First Boston should the checks bounce.
The brokerage’s salesmen often favored selling silver contracts because of the metal’s ″glamorous″ image, but also sold agricultural and financial futures, especially when the season or a news event would bring a certain product to the public’s attention, the pleas said.
According to the pleas, the men lied extensively about their expertise and poor track records, as well as the size and growth of First Boston.
Founded in the late 1970s by Don R. Schleicher and his brother, Richard, the firm rapidly grew into one of the nation’s leading futures trading firms, generating $40 million annually in sales from offices in Denver, Nevada and California.
In 1987, the firm collapsed beneath a mountain of investor lawsuits and investigations by the FBI and other agencies.