Arrests At Spectrum Information Technologies
NEW YORK (AP) _ Federal authorities said Tuesday they had arrested an employee of Spectrum Information Technologies Inc. and three from an investment company closely tied to Spectrum’s president.
The four men were expected to be charged with conspiracy and mail and wire fraud for allegedly running a ″boiler room″ operation that earned up to $1.7 million a year in fees from companies seeking financing. Few of the companies ever actually got the financing, authorities said.
The four included the owner and two employees of Paradigm Group, formerly the Caserta Group, which was once owned by Spectrum president Peter T. Caserta, according to Sean O’Shea, chief of the business and securities fraud unit of the U.S. Attorney’s office for the Eastern District of New York.
O’Shea said the four and others solicited small-to-medium sized companies, usually high-technology firms. In exchange for an upfront fee - usually around $30,000 - Paradigm promised to obtain financing, he said.
O’Shea said that the workers made false statements to lure potential clients, including that John Sculley, the former Apple Computer chairman and chief executive who joined Spectrum last October, was on the board of the Caserta Group. He was not.
Sculley quit Spectrum and sued Caserta for $10 million last month, charging Caserta hid the company’s financial problems and the fact that it was the target of a Securities and Exchange Commission probe at the time Sculley was hired.
The lawsuits were settled out of court last month.
The arrested workers include John Bohrman, who bought Paradigm from Caserta for a price of $15,000 a month over 18 months, according to O’Shea. Bohrman is Caserta’s son-in-law, authorities said.
The other Paradigm workers are John Schiavo and John Schoonmaker, O’Shea said.
Howard Schor, a Spectrum employee charged with obtaining licenses for Spectrum technology, also was arrested.
A Spectrum spokesman, William Campbell, confirmed the arrests and would not comment further.
Eric Levine, a lawyer for Sculley, said he had no comment on the arrests.
Details of the charges were to be revealed at an arraignment Tuesday at 4 p.m. before U.S. Magistrate Joan Azrack in U.S. District Court in Brooklyn, according to William Muller, executive assistant to U.S. Attorney Zachary Carter.
Spectrum stock was down 62 1/2 cents a share at $2.44 when trading was halted shortly after 2 p.m. on the Nasdaq stock market.
Spectrum has patents covering the transmission of data over cellular and other radio systems.