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Ex-Toluca Chief Pleads Not Guilty in IPO Case

July 11, 2001|Bloomberg News

The former president of now-defunct Toluca Pacific Securities pleaded not guilty Tuesday to charges of conspiring to manipulate an initial public offering with a stockbroker who was slain in 1999.

Paul Fiorini was indicted on federal charges of making $4.5 million in illegal profit on a 1995 private placement and initial public offering for Emmett, Idaho-based T.J.T. Inc., an axle and tire company.

The indictment, handed up on July 2, alleges that Fiorini conspired with Allan Chalem, who supervised the firm's New York branch office. Chalem and another stockbroker, Maier Lehmann, were shot to death in a Colts Neck, N.J., mansion in October 1999. Their slayings remain unsolved.

Toluca, formerly based in Burbank, induced officers of T.J.T. to raise capital through a private placement, the indictment alleges. Toluca later raised $3.7 million through an IPO and then manipulated the stock, court papers allege.

"Paul Fiorini, the defendant, Allan Chalem, and others unlawfully and secretly caused a substantial portion of the private placement shares and warrants to be issued to accounts that they secretly owned or controlled," the indictment said.

The men allegedly misrepresented material facts to customers, bought shares for customers in the IPO and aftermarket without their consent, and unlawfully confirmed sales of the securities before the effective date of the IPO.

Fiorini, a 38-year-old resident of Linden, N.J., appeared Tuesday before U.S. District Judge Lewis Kaplan in Manhattan and was released on $200,000 bond.

Michael Drewniak, a spokesman for the U.S. Attorney's office in Newark, N.J., which is investigating Chalem's slaying, would not comment.

In 1997, the National Assn. of Securities Dealers told Congress that it was investigating nine brokerages and 19 small companies, including Toluca and T.J.T., for possible organized crime links.

T.J.T. controller Scott Beechie denied any involvement with mob figures at the time.

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