Former Securities President to Plead Guilty and Cooperate in Stock Fraud
NEW YORK (AP) _ The 29-year-old former president of a Wall Street securities firm will plead guilty to manipulating stock that climbed in value while others tumbled in the crash of October 1987, federal prosecutors said Thursday.
Stanley Aslanian Jr., former president of Haas Securities Corp., also will cooperate with an investigation by the Securities and Exchange Commission, the FBI and the U.S. attorney’s office in Manhattan into his firm’s activities.
U.S. Attorney Rudolph Giuliani said he hoped Aslanian’s plea bargain would encourage others allegedly involved in securities fraud to do the same.
An FBI spokesman said 20 agents are assigned to investigate stock manipulation, probing and unidentified persons, entities and deals. Giuliani said the investigation will be about past activities, not current ones.
Aslanian would plead guilty Friday in U.S. District Court in Manhattan to one count of conspiracy to commit securities fraud by manipulating stock, Giuliani said.
Under court procedure, Aslanian pleaded innocent before a U.S. magistrate Thursday and waived his right to require the government to present his case to a grand jury for possible indictment, said Assistant U.S. Attorney Peter Lieb.
Aslanian faces up to five years in prison and $250,000 in fines.
According to the information filed by the government, Haas Securities went out of business Oct. 28, 1987, after Aslanian was involved in manipulating stocks.
Haas Securities was a 75-year-old firm with 12,000 customers and four offices across the nation, officials said. Giuliani said the company employed more than 100 people.
One way Haas Securities manipulated stock was to enter inflated prices into the National Association of Securities Dealers Automated Quotations computer network, Lieb said.
Kalman Gallop, Aslanian’s attorney, said Haas Securities is in Chapter 7 liquidation proceedings in U.S. Bankruptcy Court in Manhattan.
″Millions and millions of dollars″ were involved but profits could not be easily determined, Gallop said. Aslanian declined to comment.
The securities’ stock rode out, even rose above, the stock market crash of Oct. 19, 1987, before it came tumbling down, Gallop said.
″They held up remarkably for a day or two and some went up after the 19th. They had an erratic behavior,″ Gallop said.
Then the company faltered and the investigation began once Haas went out of business nine days after the crash, Lieb said. Gallop acknowledged there were customer complaints.
″We have seen a proliferation of these kinds of activities since the crash,″ James C. Esposito, an assistant deputy director of the FBI, said at the news conference.
Lieb said this is a new case involving the manipulation of four stocks: TS Industries from the Salt Lake City area; Bigo Tires; Flores de New Mexico in New Mexico and Cliff Engle Ltd. of New Jersey.
The information alleges that the scheme lasted from June 1985 until November 1987.
″The information further charges that Aslanian and his co-conspirators employed a variety of fraudulent and manipulative devices to raise, maintain and control the price of the manipulated securities,″ Giuliani said.
The methods included concealing ″certain co-conspirators controlled the public markets″ for the maniulated stocks; publishing false information about the companies; and selling stock without authorization to retail customers who did have the money to pay for the stock, Giuliani said.
The co-conspirators also would ″discourage and at times refuse to accept sell orders from customers,″ according to the information.