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Penny- Sto'ck?

Back Page

 

I -onLongI:?f

land? knew that commissions came ?rst.

11 IButthre gnonths ago, the relationship shattered when

'1 Moran 

111; out of business,.i victimizing scores of

brokers a creditors: Hardest Ehit were some of Mor? .
an s. 100, 00 customers whose investments in low. 

priced, spgcul'ative stocks all but vanished.

Many igvestors, some of 'ujhom- have iiled com.

plaints ag
- 

In a press

state seen

the comp
?We 'k

crackdow-
which sta

 

'involiring

?rms out
FIlori'da,
pen fly-Silt}

to in'vesto

Armed wi
the heigh.
Moran,
uate and
WallStIre

-I lybecorni
I. _York brok

 

 

Along 
Once, wiri
I heat back
he never a

 
 
 



 

inst. Moran, say they are victims of an .en-

terprise tl' at gives new meaning tqthe phrase ?buyer'

he Securities: and Exchange Commission

and the US. Attorney in Bro; are investigating.

conference, the Massachusetts secretary of
sad the company of fraud, and has barred
nyfrom doing business Ithere. I

ow of no wrongdoin%' said Martin Kar-

- - linsky, attorney for J. T. Moran. He said customers
were treated fairly

The accusations come 18 months into a federal
1 on the so-called penny- stock market. 

regulators call ?t No. 1 threat facing

small investors today.? ]The American Securi-
ties Administrators Association a group of state regII.1?_
iators, says investors los'e $2 billion -a year in, scams

low-priced steaks in 'question?able start-up

is? companies. The era kdown has but many penny-stock

3f busine s, but fraud remains rampant.
colorado and Calif rniar are centers for
:k fraud. -BuIt the Ne York area, especially

.Long Island, with. its concentration of wealth, long
has been 1 spawning ground for dozens of unscrupu-

Ilous perm; stock brokerages a rd branch offices.
A lack a the short, troubled history of .T. Moran
- - 8: Co. and 
I the. world It is a story of ambition and
greed. It 15 also a story of stocktirokers who, according

ts?Long Island brokg?rs gives a glimpse into

s, Would stop in nothing to make a sale.

M1 ran Co'. began with big aspirations.

$5 million raised in a public offering at

 

 

ow 36,' is _a feisty destra University grad-

ormer seminarian. He had kicked around' I
selling? msurance and securities, eventu'al- - 
gpresident of Broaddhild Securities, a New .

rage that sold stookd like those T. Moran

would late sell. 

away? Moran became known as a lighter.

walking his dog through Battery Park, he .-
group of muggers with a rock. r1ends say' 

a brokerage firm he didn? want to? buy.

 

  

 

 

'ments
liaro Mecca. one of Hasho top brokers. "g 2,:5
Mecca bought a $445, [160 home in Niss?gu
around the cornerI frtm. Grumman Corp, chi execua
Ihn 0? Bnen;' 1411211 estate records sh

 

    
 
 

 

 

 

 

 
  
 
    

of the 1987 bull market, founder John I- itiv'eI

Moran aimed to make his firm 'a Wall Street power,

 

 

 

 

 

 
  

ages, but there specialised 1n 

Capital Group Inc, hich. Mp
1966; I'erwoodwae, 

   

Some 0 his acquisitions were traditional broker? I
army stocks. Foremost 
among th as was.- the 'etail operation of Sherwood

ran? acquired in- May,
sor to First Jersey- -Se-

  

 
 
 

 
  
 
     

 

for ads of its clean- cut
nna'n, surveying the American
o'pter while exhortirig investors

 

- charged it with mani-

 

Ierwo?od? a style; better than Greg-
he Huiiatington oIfIiIce, SliIer-
cl

Ir-iefids .

I mg with 11g

 

 

 

 

 

 

 

 

Gr?goryI Hasho, top brokerI:
- 'This is not an evil empire.'
I 86 it became famous. -
According to.- former brokers. and legal claims brought
by customers, bro en's routinely ?outed secui'iti'es
.by guaranteeiI pro?ts andt

 
  
  

As- I.
I0 11 _First' Jersey. '11eI aki' ?t h' 
ated? in the 1986 I Ing pl 1: es

parItI ol? Moran' 

 

 

mis?sic:

 

   
 

?WI-ills; former landlords' say. 
_Iey roke a helluva I_-lot_ of. things Is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  
  
 
 
 
  
 
   
 
   
 
  
 
 
  
 
   
 
   
 
  
  
 
   
 
  
 
  
   
  
  
      
     

  
    
 

Hasho - I

   

     

I New brokers were Eaid to be given ittle raining. 3"
Form broke'rs- say recruits

I pitches I
while tending on desks' in front of fellow bro am who

  
 
 
  
  
 

   
 
     
 
 
   
 
  
 

 

  
 
    
  
    
 
  
 
  
 
 
  

  

 
 

 

Wild Bunch 

e'y on this, You have myi word on it. 

When the price dropped, Magioncalda asked Fal-
cone to sell, but Falcons allegedly refused. Magion-
calda said another brokerage sold the securities at a
$43,0001oss.

look at my wife and kids,? Magioncalda said. ?It-
was their money, too. I blew it. 

Falcons has yet to formally respond to the claim - -

only recently filed by Magioncalda. In an interview, .

.Falcone denied the allegations. ?That?s not the way I
conduct myself,? Falcons said

Edward Modzelewski, a physical therapist from
Huntington, began doing business with broker Wil-
liam Mecca when Mecca worked at First Jersey. He
followed him to Sherwood and later Moran. Before
Modzelewski stopped investing, he had trusted $1
million to Mecca. He said he lost $662, 

In a legal proceeding against Mecca, 
alleges the broker lured him with guarantees. Like
Modzsleweki allegedly bought Moran
units after being promised a good-customer discount.
Mecca denies the allegations. He said Modzsiewski
knew what he was doing and.? 1e- 15mg to cover for his

own mistakes. ?He has tliings' tlawsuit that are
complete lies," Mecca said

Hash 0, who also -1s agreed 1n the complaint, said he -

did nothing wrong.

Dario Sentoro, a Stony Brook real estate broker,

said he first bought stocks from J. T. Moran last Sep-

. ternber and said a. number of trades scoured without.
his permission He found his complaints did no good
andpe said that by the time Moran failed, he had lost his
entire $36, 0410 investment. .

J. T. Moi-an made its money by taking- obscure, ii-
nancielly weak IcoImpanies public and selling their
stock through the brokerage network. Like other pen-
?rms targeted by regulators, it also made
money by illegally manipulating stock prices, accord-
ing to the ModzIsIeWski complaint. Moran allegedly
bought inexpensive. stocks of small companies, and,
using its brokerage network, jacked up the prime by
selling the stocks between customers. When the
prices got high enough, Moran sold its inventory to
the public at tremendous pro?ts, the.- complaint says.
To keep prices high, it made it dif'?'cblt -- if not im-
possible for clients to sell on demand the stocks
that Moran manipulated,- according to the complaint.

.The scheme was possible because Moran deminatsd
the market 1n the 100 or so ?house stocks' it sold.
When Moran Went under, the prices of house stocks
.i'ell by as much as 85 percent or more.

.- Karlinsky, Moran' attorney, denies the mariipula-
. tion charge. He said. lawyers can allege anything they
want in legal actions and that Mods'elewski? a com?
plaint provides no. examples of manipulation, only
generalitiee.- He said Moran always sold customere?
securities demand.-

Rookie at Moran took their- cues from

. scripts, denies knowledge of, that;

. Sometimes tai 'false statements, former

brokers about a New Jersey company'-

I. called Inc. says? Med Mobile had a ?major

AIDS the Ganadian government. A
Mad: says the statement' as false.

John'- ea Plainview printer,_ remembers

_hie Moran 
tract. _?This I .111 .the stock really.
.. - .. 
555d . Mil--
~iclairns about 

cut I between. er .
. 

one, re?err'

.-. hers: 
were. copied-end deter mo'di: -

brokerage company.

_hirh about the ?on- 

I - 
John Kevanagh, Isif a Pla'invlew claims he lost
Santoro, a Stony Brocki 'real estate broker, says he

stock a few before J. T. Moran went under. In

The stock, which Moran sold- through. his btokerage 
netwark for 85. a share, ndw. trades for. pennies.

Moran declined to' be inte'rvieived and referred ques-

t1one to Karlineky.

Behind the soaring sales was a regulatory night-
mare. Friends e'ay Joh?n' Moran war-enterprise as complex andmItiIghtIy controlled as a
?We eI?g'rew 1110' feet from the ad- 
ministrative end of things, . said William Wehner, the -
cornpany president. ?It cauglit up. 'on 1111.. 

Gritics say Moran might not" have _b'eexi 111111111 01?
raining in brokers traitied in the methods of First
Jersey; They also say he might not hails been. inclined 
to. He needed the brokers to sell Med Mobile. and. the 
'otl'le'r stocks. ?They wanted to have brokers who wer- .
en ?t Iii-1291111111131 interested' 111' nialiing money for their 
customers,? said Perrin Long; a brokerage-industry.

analyst for LipperAnely'ticsl Secunt1es 11'1Msnhatten As 

Others agree. ?What we vs. 11 here, and what 
we?ve got evidence of,? 1s apparen?lfl? a firm-wide policy - 
of defrauding people of their hard-earned 1111111111,".
said Joel Bernstein, a attorney who. regret; . 
slants a number of clients with :cla'ims againstiMoran,

Securitiiea-law violations that the 1101111111111 missed,
state regulators found. The Connecticut banking de-
partment, forf?instence,? said brokers we're. selling a 3
number of stocks before. the stocks passed a- state

mandated rsv1ew Connectlcut eventually Iban'ed J. T.

Moran from. doing business? 1n 'the state; .5

A similar attack on J. Moran came in Massachu- 
setts. Fender employees say the Massachusetts probe .I 
prompted Moran? sI ?nancial Support _of- Rep. Joseph 
Kennedy, who was coneldenng 11- run- forlstateigove - 

'jiI'rokere ny? and
waif-e



In a stock footed by Memni' Dario
Investment with Moran

ais-