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Broker accused of fraud
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May 13, 1997: 6:41 p.m. ET
A.R. Baron, 13 executives charged with bilking investors of $75 million
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NEW YORK - Thirteen stockbrokers and the now-defunct A.R. Baron & Co. were arrested Thursday and charged with cheating more than 45 investors out of $75 million over a five-year period.
The 174-count indictment charged Baron and the executives with lying to investors to induce them to buy certain securities, manipulating the markets to benefit themselves and making unauthorized trades.
They also were charged with refusing to follow customer instructions to sell securities, ignoring customer complaints and forging documents to cover up their actions.
"A.R. Baron was created and existed for no other reason than to line the pockets of its executives and employees at the expense of unsuspecting members of the investing public," Manhattan District Attorney Robert Morgenthau said. "Today's indictment depicts an investment firm totally out of control."
One of the individual charges alleges that Baron employees forged documents instructing Citibank to transfer more then $1.7 million of investor money to a Baron account at Bear Stearns, which handled parts of Baron's transactions.
Baron also allegedly handled a $9.1 million initial public offering, selling $20 million worth of stock and keeping more than $10 million in its own coffers.
The ten-month investigation began after Parsons & Whittemore Ltd., a Rye, N.Y., privately-owned firm that lost at least $2 million, complained to authorities, Morgenthau said. Regulators shut the firm down in July 1996.
Other victims included New York University, which lost more than $600,000; Anthony Pilkington of Manchester, England, whose family owns a huge glass-making company and who was bilked out of at least $500,000; and Hong Kong businessman Keith Hsu, who lost more than $1 million, Morgenthau said.
The prosecutor said some of the money allegedly stolen from investors went into a Cook Island trust in the Pacific, Swiss bank accounts and the brokers' personal lifestyles.
If convicted, the defendants face up to 25 years in prison and millions of dollars in fines.
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