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SEC Accuses Pa. Brokerage of Fraud

August 18, 1999

BALA CYNWYD, Pa. (AP) _ A brokerage operated by a father and son defrauded 7,000 investors of $60 million by selling them unsecured debt obligations that were advertised as being safe investments, the U.S. Securities and Exchange Commission alleged in a lawsuit.

The lawsuit filed Tuesday in U.S. District Court in Philadelphia accused William S. Shapiro, 75, owner of Welco Securities Inc., and his son, Kenneth Shapiro, 46, president of the company, of suggesting in advertisements on kiosks in airports, bus stations and other public places that the speculative investments were as safe as bank certificates of deposit.

The Shapiros marketed the investments _ debentures of Walnut Leasing Co. and a subsidiary _ from 1988 to 1997, the SEC lawsuit said.

A telephone call to Welco Securities and Walnut Equipment Leasing went unanswered this morning.

Walnut Equipment Leasing and the subsidiary were controlled by the Shapiros, according to the lawsuit.

The suit said the two companies filed for bankruptcy in August 1997, making it unlikely that investors would recoup their money.

The primary income of Welco Securities has been from underwriting the sale of $60 million worth of the debentures in the leasing firms, which were in the business of financing leases of small-business equipment, the lawsuit said.

``The only way Walnut (and the subsidiary) were able to generate funds sufficient to pay their operating expenses and interest payments to existing debenture holders was by selling to the public new issues of debt securities,″ according to the lawsuit.

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