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3 Plead Guilty in Securities Fraud : All Had Been Officers of Failed Bevill, Bresler Brokerage

November 06, 1986|Associated Press

NEWARK, N.J. — Three principals of failed government securities dealer Bevill, Bresler & Schulman Inc. pleaded guilty onWednesday to a complex fraud that authorities said cost customers more than $100 million.

Creditors--more than 70 banks in 20 states and a number of municipalities and individuals--are awaiting the outcome of the liquidation of the dealer and its affiliate, Asset Management Corp.

Entering pleas on Wednesday were Robert L. Bevill, the brokerage firm's former chairman; John D. Rooney, former treasurer, and Stuart Gottlieb, a former senior vice president.

Gottlieb, 38, also pleaded guilty to a charge of tax evasion arising from a scheme in which he allegedly embezzled about $1.9 million from Asset Management Corp. Bevill and Rooney also pleaded guilty to a charge that they conspired to file false individual tax returns.

The firm's former president, Gilbert C. Schulman, 38, pleaded innocent to charges of conspiracy, fraud and making false financial statements during the hearing. U.S. District Judge Dickonson R. Debevoise set a trial date for Jan. 13.

Robert Roche, director of the Internal Revenue Service's criminal investigation division in Newark said investigations continue into whether other Bevill, Bresler officers committed tax crimes.

Schulman, Bevill, 43, and Rooney, 40, were all indicted Oct. 14. Gottlieb, then named as an unindicted co-conspirator, was charged outside any indictment on Wednesday.

Banks Cheated

Assistant U.S. Atty. Paul Weissman said the three officers who pleaded guilty took part in a scheme from 1982 to April, 1985, in which they defrauded customers of Asset Management Corp., mostly banks, thrifts and municipalities.

The fraud occurred in repurchase agreements, or "repos," in which the dealer sold securities to an investor--such as a bank--and promised to buy them back with interest. But the securities lacked any collateral or were backed by collateral that was not the firm's to pledge, authorities said.

While the two companies lost money, Schulman, Bevill and Rooney were alleged to have paid themselves more than $15 million.

Authorities says those three and Gottlieb concealed their fraud by deliberately making false statements in reports to the Securities and Exchange Commission and the National Assn. of Securities Dealers.

Gottlieb embezzled the $1.9 million from Asset Management by directing company agents to wire funds directly into a personal checking account, authorities said.

Bevill, Bresler & Schulman and Asset Management filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in April, 1985, and were placed in receivership.

The firm's former executive vice president and supervisor of trading, Robert S. Levine, pleaded guilty to related charges on Oct. 23. Authorities have said he cooperated in the investigation. Bevill could receive up to 15 years in prison and a maximum fine of $750,000; Rooney up to 12 years and a $505,000 fine, and Gottlieb up to 10 years and a $500,000 fine, Weissman said. In addition, Gottlieb is subject to civil fraud penalties and interest charges, Roche said.

Levine, who had pleaded earlier, could be sentenced to up to six years in prison and up to $15,000 in fines.

Sentencing dates have not been set.

When Bevill, Bresler failed in 1985, it became the second government securities dealer--after ESM Government Securities of Fort Lauderdale, Fla.--to go down in less than two months.

Their collapse drew criticism of the failure to have government regulation of the market, in which as much as $200 billion of government securities can be bought and sold in a single day.

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