Once again, we are reminded that the stock market is a rigged casino in ways large and small.
David Cooper, a 38-year-old broker at Joseph Gunnar, a small New York investment banking firm, allegedly shared inside information on secondary stock offerings with three traders.
The foursome allegedly bagged over $1 million between January 2018 and May 2024, and they were all indicted on Wednesday.
“This is a case of pure greed where individuals lied, obtained information illegally, and used it solely for their own personal financial gain.” said Brendan Donahue, acting inspector in charge for the United States Postal Inspection Service.
Unlike many white-collar defendants, these guys were smart and didn’t leave a trail of emails or texts. Federal investigators had to track them the old-fashioned way, putting wire taps on their phones.
It leaves us to wonder how many other brokers are pulling the same stunt with sneakier communications. Does the average investor stand a chance?
Cooper, of Larchmont, NY, faces up to 25 years in prison if convicted. So do the traders: Randy Grewal, 54, of Anthem, Ariz.; John Lowe, 61, of New York; and Richard Ringel, 54, of Boca Raton, Fla.
According to the indictment, one of the stocks they traded was Chicken Soup For The Soul Entertainment. But who needs chicken soup when you can have money?
(P.S. Chicken Soup For the Soul Entertainment made the bold move of acquiring Red Box in 2022. But buying DVD vending machines in the streaming age proved yet another blunder. The company entered a Chapter 7 bankruptcy liquidation last year.)
Another mismanaging wealth manager
You’ve got to keep an eye on these so-called wealth managers. One of the things they sometimes like to manage is your money into their accounts.
The Securities and Exchange Commission on Friday charged Scott J. Mason, 66, and his companies, Rubicon Wealth Management and Orchard Park Real Estate Holdings, with defrauding at least 13 advisory clients out of more than $20 million.
He’s also facing parallel criminal charges that could land him up to 80 years in prison.
The Gladwyne, Pa.-based advisor simply took his clients’ money, prosecutors allege. They say he forged client signatures, misrepresented how he was using client funds, and provided fake account statements and tax documents for years.
He spent his ill-gotten gains on international travel, credit card bills, country club dues and ownership stakes in a miniature golf course on the Jersey Shore.
Perhaps all this financial folly improved his golf swing.
MoviePass schemer makes Hall of Shame
Please Welcome Ted Farnsworth to the Business Blunders Hall of Shame.
The MoviePass schemer handily made the dubious honor following his Jan. 7 sentencing on fraud charges.
MoviePass, launched in 2017, offered an impossible deal to moviegoers. For less than $10 a month, they got a movie ticket every day. It didn’t make any business sense, yet Farnsworth was able to paper it over with lies.
Farnsworth, 62, of Miami, has been locked up since his bond was revoked in August 2023. While out on bond, he allegedly used company funds to pay for male prostitutes.
White-collar felons offer cautionary tales for investors, lenders, customers, employees and other stake holders. The Business Blunders Hall of Shame is an ongoing effort to shine a light what is often forgotten in the 24/7 news cycle.
Nominations are accepted in the comments section. Click here for the criteria.
Oh, Joann. Not again?
Joann on Wednesday filed its second bankruptcy within a year.
The 82-year-old crafts retailer blamed its financial woes on sluggish sales and inventory issues. But its problems go back much further.
Private equity firm Leonard Green took over Joann in 2010. It loaded Joann’s balance sheet to finance its $1.6 billion acquisition and the fabric store chain has been a debt-bloated disaster ever since.
Joann serves as just another example of the financial devastation that private equity firms foist onto the companies they flip – shutting operations, putting people out of work and stiffing investors and lenders. Now the $13 trillion industry plans to lobby for permission to accept investments from the retirement accounts of average Americans.
Joann plans to use its second bankruptcy filing to ditch more debt and sell itself to yet another private equity firm, Gordon Brothers. Like that’s going to patch things up.
In other blunders this week
So many blunders, so little time.
American Express agreed to pay $230 million to settle civil and criminal charges related to deceptive credit card marketing to small businesses and doling out “inaccurate tax advice.” Sounds like some of its customers might have been better off leaving home without it.
Robinhood agreed to pay $45 million for allegedly violating securities laws. The financial services firm draws its name from a classic tale of banditry. Was that the first clue?
Walgreens has been charged for dispensing opioids and other dangerous drugs without legitimate prescriptions. Apparently, the opioid crisis is far from over for the companies that helped spawn it.
Douglas Christmas, an 80-year-old pillar of the Los Angeles art scene, received a two-year prison sentence for embezzling from the bankruptcy estate of his gallery. In a report in the Los Angeles Times, he he’s described as “a man so consumed by greed and ego that he embezzled hundreds of thousands of dollars from his gallery’s bankruptcy estate to put toward the rent on a museum dedicated to himself.”
Speaking of museums, maybe we can offer Christmas an exhibit in the Business Blunders Hall of Shame.
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So…a trader faces 25 years for splitting $1M with 3 others, over 6 years? 25 years for stealing only $40k/year? He should get prison for sheer stupidity.