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First Traders Arraigned Plead Guilty to Fraud Indictments

August 9, 1989

CHICAGO (AP) _ The first three traders in an expected parade of guilty pleas were arraigned Tuesday on charges stemming from a federal probe of fraudulent trading at the world’s largest futures exchanges.

Two brothers - Brian Sledz, 29, and James Sledz, 24 - pleaded guilty to one count each of violating the Commodities Exchange Act. The elder brother also pleaded guilty to one count of wire fraud, and the younger to one count of mail fraud.

A third trader, Thomas Braniff, 33, pleaded guilty to one felony count each of mail fraud and violating the Commodities Exchange Act.

The three are among 46 traders indicted Aug. 2 in the FBI probe of the Merc and the Chicago Board of Trade. Published reports have said as many as 30 defendants are expected to plead guilty and cooperate with authorities.

The Sledz brothers, who traded in the Japanese yen pit at the Chicago Mercantile Exchange, entered their pleas before U.S. District Judge George M. Marovich. Additional defendants are scheduled for arraignment Wednesday.

James Sledz faces a maximum penalty of six years in prison and a $350,000 fine, said the brothers’ attorney, Barry Spevack. Brian Sledz could be sentenced to 10 years in prison and be fined $650,000.

They have agreed to make restitution to customers, with the amounts will be determined later, he said.

The charges in last week’s indictments range from pre-arranged trading to racketeering conspiracy and tax fraud. Most allege schemes in which traders pocketed part of the profit from trades made for customers while passing their own losses on to customers.

James Sledz’s plea agreement said he executed pre-arranged trades to make money for himself and his brother, and mailed confirmation of the trades to customers in violation of exchange rules, Assistant U.S. Attorney Mark Pollack said.

Brian Sledz said he executed pre-arranged trades on behalf of the Merrill Lynch and Prudential-Bache brokerage houses to make a profit for himself and his brother. He confirmed the trades through wire communication, Spevack said.

Both acknowledged engaging in ″numerous pre-arranged trades,″ the attorney said.

The brothers, from suburban Naperville, sold their trading seats at the Merc in January when the first media reports of the undercover probe appeared.

Braniff said in his plea agreement that he conspired with trader Michael Sidel on July 18, 1987, to defraud one of his customers by prearranging two trades for Japanese yen futures contracts at the Chicago Mercantile Exchange. Sidel was indicted last week on charges of mail and wire fraud and violating the exchange act.

Braniff also admitted to conspiring with an unidentified trader on two transactions on September 29, 1987.

Braniff faces up to 10 years in prison and a $500,000 fine. He was released on a $4,500 recognizance bond pending sentencing after the remaining cases against yen traders are resolved.

The three were barred from the floor of the exchange in an agreement last week with the Commodities Futures Trading Commission, which oversees the exchanges, and still face disciplinary action, said Merc spokesman Andrew Yemma.

The brothers were released on $4,500 bond each pending sentencing, which is to be scheduled when the remaining cases against yen traders are resolved.

A total of 21 traders were indicted for alleged illegal activities in the yen pit. The remaining 25 defendants traded in the Swiss franc pits at the Merc and the soybean and U.S. Treasury bond pits at the Chicago Board of Trade.

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