Pa. Money Manager Pleads Guilty
Jan. 25, 2000
PITTSBURGH (AP) _ A money manager pleaded guilty to persuading 50 school districts across Pennsylvania to put school construction money in risky investments, then trying to conceal up to $71 million in losses.
John Gardner Black, 55, pleaded guilty Monday to 21 counts of offering fraudulent investment advice, three counts of mail fraud and two counts of making false statements. He faces a maximum penalty of 130 years in prison and a fine of up to $14.8 million when sentenced in April.
Black was indicted last June on 134 counts and had been scheduled to go on trial next week.
``Mr. Black did not steal any money from any client,'' defense attorney Richard L. Scheff said Monday. ``What he tried to do was follow a change in market conditions. Where John went wrong was in concealing those losses.''
Scheff said Black is planning to sue the law firm that advised him on investments. He also said Black wants to reimburse every investor who lost money.
Prosecutors said the scheme resulted in $71 million in losses. Black put losses at about $61 million.
``The effects on school districts were pressing and severe,'' said U.S. Attorney Harry Litman. ``They faced delays in construction projects, great debt burdens and higher taxes to make up the deficits.''
Arden Ebling, president of the Daniel Boone Board of Education in Berks County, said the schools were victims of basic fraud.
``He obtained the trust of school districts and municipalities around the state, and everything was not on the up-and-up,'' Ebling said. ``He lied.''
Mid-State Bank & Trust, the bank that handled the investments for Black, has agreed to settle civil lawsuits filed by the school districts and other agencies by offering to pay them $51 million, Litman said. Black has also agreed with the SEC to pay the districts $3.6 million.