Jailed Man Accused in $8.7M Fraud
WASHINGTON (AP) _ From a prison cell in the Adirondacks, a man convicted of larceny managed to defraud investors of millions in a scam involving high-profile stock sales, securities regulators allege.
Ira A. Monas frequently spoke by phone from prison with a man he hired to run his investment company, the Securities and Exchange Commission said Wednesday. The SEC sued Monas in federal court in New York City, alleging $8.7 million in securities fraud involving several sales of stock by companies going public, known as initial public offerings or IPOs.
Monas, 45, is serving a two- to four-year sentence on convictions for grand larceny and criminal possession of forged monetary instruments in a state prison in upstate New York.
Monas’s attorney, Stephen P. Scaring, said his client ``definitely maintains his innocence″ regarding the SEC’s allegations in its civil suit filed Tuesday. ``He’s anxious to get to the bottom of it, but it’s somewhat difficult given that he’s in prison at the moment,″ Scaring said by telephone from Garden City, N.Y.
He said Monas also has been the focus of a criminal investigation by federal authorities but no charges have been filed in that case.
The SEC’s suit also names Michael Irwin Lamhut, whom Monas hired to run the company, Milan Capital Group Inc. of Melville, N.Y., shortly before Monas was imprisoned in October. In January, the SEC received a court order temporarily freezing $3.7 million in assets held by Milan Capital, after investors complained they had not received shares in an Internet auction company, FreeMarkets Inc., they believed they had purchased.
Lamhut, 53, lives in Levittown, N.Y. He declined comment when reached by telephone.
In addition, the SEC named Jason M. Cope, 26, the Pittsburgh branch manager of AC Financial Inc., which the SEC says is controlled by Milan Capital. Cope, who lives in Coraopolis, Pa., has an unlisted phone number and could not be reached. The SEC said he is not represented by an attorney.
The SEC is seeking unspecified fines and repayment of allegedly illegal profits from Monas, Lamhut and Cope.
The agency alleges that late last year, the three sold investors shares in four hot IPOs _ of World Wrestling Federation Entertainment, United Parcel Service, FreeMarkets and Fogdog _ to about 190 investors, collecting $8.7 million.
They falsely told the investors that they had access to the exclusive market for the high-profile IPOs and could buy shares in them at special, lower prices, the SEC said.
Instead, the defendants allegedly stole the investors’ money and gave them phony trade confirmations and account statements. They also returned relatively small amounts of money to some early investors, in the classic formula of a Ponzi scheme, the SEC said.
At the time of the UPS, FreeMarkets and Fogdog IPOs, the defendants failed to disclose to investors that Monas was serving a prison sentence for grand larceny, the agency said in its suit.