NEW YORK — A federal grand jury Wednesday returned a long-awaited indictment against former society lawyer David W. C. Clark, an alleged participant in an insider trading scheme involving advance notice of Wall Street Journal articles.
The 55-count indictment also charges that Clark, 37, embezzled more than $3.7 million from clients of his Park Avenue law firm and evaded federal taxes on the sum in 1980, 1981 and 1982.
The indictment alleges that Clark made a net profit of $453,000 by using some of that money to trade securities illegally on the basis of information about articles to be published in the newspaper.
Clark is to be arraigned Jan. 29 on felony charges including securities fraud, mail fraud, wire fraud, conspiracy, perjury and income tax evasion.
Clark's indictment had been expected for more than a year because all other known participants in the insider trading scheme had long since been indicted, tried and found guilty.
They are R. Foster Winans, the former author of the Journal's influential "Heard on the Street" column; Peter Brant, a former star stockbroker at Kidder, Peabody who traded stocks on the basis of tips from Winans about the content of upcoming columns; Kenneth Felis, a friend and fellow stockbroker of Brant's, and David Carpenter, Winans' long-time roommate and companion.
Brant pleaded guilty to criminal charges in the case and testified against the other three defendants; he has not yet been sentenced. Winans, Carpenter and Felis were convicted of fraud charges in 1985 but have appealed to the U.S. Supreme Court, which will hear arguments in the case during its fall term this year.
Assistant U.S. Atty. Carl H. Loewenson Jr. declined to comment on the reason for the long delay in Clark's indictment, although some lawyers familiar with the case said prosecutors may have been awaiting a final court ruling on the other participants' cases.
With the Supreme Court accepting their appeals, that will probably not happen until mid-1988, when the statute of limitations on Clark's alleged crimes will be running out.
Clark was charged by the Securities and Exchange Commission with civil fraud in the insider trading scheme in 1984 but that case was stayed pending resolution of the others' criminal cases.
In the meantime the SEC obtained an injunction freezing a Clark bank account with $290,000 in cash to cover any future civil judgment against him. Neither Clark nor his attorney, F. Lee Bailey, was available Wednesday for comment on the indictment.
Clark was a fellow polo player and friend of Brant's in 1983, when the stockbroker began receiving tips from Winans.
Although Clark was not an original member of the trading ring--Winans testified that he never heard his name until SEC investigators mentioned it to him--Brant later testified that he invited him into the deal after Clark confided one afternoon that he was contemplating suicide because of his alcoholism and his stock-market losses.
According to Wednesday's indictment, between October, 1983, and March, 1984, Clark bought or sold stock or stock options in 17 companies based on Winans' tips to Brant, netting the $453,000.
Clark is also charged with lying to the SEC by telling investigators he had no pre-publication knowledge of the Wall Street Journal articles.
The indictment and separate private lawsuits contend that Clark also systematically looted some clients' trust accounts that had been placed under his care. Among these clients was Roger W. Wilson, an actor who entrusted more than $3.5 million to Clark. In a lawsuit, Wilson contends that Clark and Brant surreptitiously transferred cash and securities out of the account, using it themselves to trade stock and to purchase an apartment in the River House, one of Manhattan's most exclusive apartment buildings.
"By the time this was discovered, the amount left in the account was $1.23," said Wilson's lawyer, Leonard Marks, in an interview. Wilson got back $1.2 million when the River House apartment was recently sold but his remaining claims against Brant, Clark and others are due for trial in April. Brant and Clark have placed blame for the looting on each other.