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Arrests Resurrect Questions About Sculley’s Judgment

March 23, 1994

NEW YORK (AP) _ Questions deepened Tuesday about a tiny high-tech company briefly headed by former Apple Computer chairman John Sculley as federal law enforcers arrested one employee and four others on fraud charges.

Sculley, one of America’s foremost business celebrities, wasn’t implicated in the arrests stemming from a probe into the workings of Spectrum Information Technologies Inc., a wireless data-delivery business he joined last October in a frenzy of publicity.

But law enforcers said they questioned Sculley about what they described as a ″boiler room″ operation that led to the arrests. Sculley quit Spectrum last month.

Authorities charged the five men with conspiracy and mail and wire fraud for allegedly running an 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.

Arrested were Spectrum vice president Howard Schor and the owner and three current or former employees of Paradigm Group, formerly the Caserta Group, a financing firm once owned by Spectrum president Peter T. Caserta.

The arrested men allegedly 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, said 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 men made false statements to lure potential clients, including that Sculley was on the board of the Caserta Group. He was not.

Sculley told authorities he was not aware his name was allegedly used to lure potential clients, O’Shea said.

Eric Levine, a lawyer for Sculley, said he and Sculley had no comment.

Sculley sued Spectrum president Caserta for $10 million last month, charging Caserta hid financial problems at the firm, which has patents covering the transmission of data over cellular and other systems.

Sculley also said Caserta hid the fact that Spectrum was the target of a Securities and Exchange Commission probe at the time Sculley was hired.

Spectrum countersued, alleging Sculley breached his contract by resigning. Both sides dropped the lawsuits this month.

The others arrested were John Bohrman, who bought Paradigm from Caserta; Paradigm workers John Schiavo and John Schoonmaker; and Vincent Muia, a former employee of Caserta Group.

The defendants pleaded innocent and were each released on $50,000 bail.

A Spectrum spokesman, William Campbell, confirmed the arrests and would not comment further.

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