Alan Bond indicted in fraud scheme - Brief Article

Black Enterprise, March, 2000 by Hersch Doby

Popular New York money manager allegedly skimmed $7 million in kickbacks

With the specter of top bond trader Joseph Jett still lingering over Wall Street, pension fund manager Alan B. Bond, 38, was charged by the U.S. Attorney for the Southern District of New York and sued by the federal Securities and Exchange Commission (SEC) last December for allegedly siphoning off nearly $7 million over five years in a kickback scheme.

The 11-count indictment accuses Bond of conspiracy, investment advisory fraud, commercial bribery and making false statements to the SEC during its investigation. The government alleges that Bond took $6.9 million in commission kickbacks from three brokerage firms from September 1993 to November 1998. Bond directed trades to the firms from his clients at the Manhattan investment firm Bond Procope Capital Management (BPC), where he was president and chief investing officer at the time.

If convicted, Bond could face five years in prison for each count, according to the U.S. Attorney's Office.

Currently, Bond is president and chief investing officer of Albriond Capital Management, which was BPC until Bond bought out his partner last year and reorganized. Among his duties at Albriond, Bond is a frequent financial commentator for print and television media. He is a regular feature--one of the few African Americans--on the weekly PBS show Wall Street Week with Louis Rukeyser.

Albriond, which has 25 clients including the NBA, the City University of New York and the Washington Transit Authority Local 689, Washington, D.C., manages an estimated $600 million in pension and retirement fund accounts. Albriond Capital is not involved in the alleged scheme, says Clifford C. Hyatt, an attorney with the Los Angeles office of the SEC.

Bond, who lives in Upper Montclair, New Jersey, could not be reached for comment. His attorney, John Siffert, says Bond has denied the allegations and expects his client to be exonerated. Bond enter a not-guilty plea at his arraignment, says Siffert.

The year-long SEC investigation began as a routine exam of Lintz, Glover, White & Co., a small broker-dealer in Sherman Oaks, California, according to Hyatt. Federal investigators noticed irregularities in the firm's books, including the completion of "major transactions, a money manager directing large amounts of business to one small brokerage and pretty high commissions," says Hyatt. That money manager was Bond, who made up almost 90% of Lintz, Glover, White & Co.'s business during the time.

"They're such a small firm that it didn't make sense," says Hyatt. "It's a little unusual because we started looking at firms here in the [San Fernando] Valley and ended up in New York."

Lintz is still in business and registered with the SEC, according to Hyatt. Bond also directed deals through Value Investing Partners of Westport, Connecticut, and the now defunct New York firm Brenner Securities Corp.

Bond allegedly skimmed 57% to 80% from commissions charged on his clients' investment returns from the over-the-counter market. The SEC complaint alleges that Bond dictated the markups, omitted the charges from his clients' trade confirmations and account statements, and funneled the money through a false corporation--called Satchmo Inc.--set up by Robert I. Spruill, also a named defendant in the case. Spruill worked for Lazard Freres from October 1988 to September 1991. According to the SEC, Spruill was at one time a registered representative with each of the broker-dealers under investigation.

Spruill was charged with aiding and abetting violations of the SEC's antifraud provisions. Neither Spruill, 52, of Newark, New Jersey, nor his lawyer, Frederick Schaffer, could be reached for comment. Spruill was arraigned in New York federal court and released on his own recognizance after entering a not-guilty plea.

The SEC complaint also charges Bond used the misappropriated money to finance personal activities. He reportedly owns 75 classic cars and a warehouse to maintain them. He purchased two homes in Florida and spent nearly $1 million on renovations and furnishings. Bond is also accused of using the money to pay for Broadway show tickets, his dues at the Harvard Club and his American Express credit card bill, which ran as high as $470,000 one month.

Those associated with Bond say they were shocked at the allegations. Rich Dubroff, producer of Wall Street Week, said Bond denied the charges but would not be appearing on future episodes of the show.

"Alan is my friend, and he has served our viewers well," said Wail Street Week host Louis Rukeyser. "We hope he will be completely vindicated, and that it will be possible for us to welcome him back before long."