Fool's Gold

Desperate clients hand over thousands of dollars for a chance at a job

In 1987, Jerold Weinger was the CEO of a Wall Street brokerage firm crushed under an avalanche of coke.

One of the firm's partners, six brokers and a receptionist were arrested in a massive U.S. Drug Enforcement Administration Wall Street sweep called Operation Closing Bell. A ninth employee was arrested in the firm's Florida office. Partner Wayne Robbins ultimately pleaded guilty to drug charges, and seven of the eight others either pleaded or were found guilty of possession, distribution or conspiracy to distribute cocaine, according to the DEA's New York office.

Al Cameron
Al Cameron

According to federal court documents filed in the Southern District of New York, brokers at Brooks, Weinger, Robbins & Leeds regularly traded stock tips for cocaine. In one instance, a broker gave cocaine to a principal of another company in exchange for $10,000 worth of stock in that company's initial public offering. At one point during the sting, a broker was arrested on drug charges and fired from the firm. A day later, he was rehired "because he was a good, trusted source of cocaine."

"Cocaine use and distributions were widespread in the Brooks premises during office hours," court records state. "Drug transactions were consummated on a daily basis, often in the men's room or in an area known as the 'board room.' "

Weinger, who was not arrested, issued a statement denying allegations of systemic drug use at his firm: "The firm of Brooks, Weinger, Robbins & Leeds, Inc. does not believe that cocaine distribution is widespread at the firm, or used as a medium of exchange for financial services."

The firm had been in trouble even before the 1987 busts, according to a New York Times investigation, which revealed that the U.S. Securities and Exchange Commission charged the firm with stock manipulation once in 1976 and twice in 1981. The firm settled each charge without admitting guilt, but was ultimately suspended from underwriting "over-the-counter" stocks for two and a half years.

And court records show that before and after the 1987 sweep, the SEC had fined and suspended Weinger for violations of the Securities and Exchange Act's antifraud statutes. States in which the firm had other offices had also fined and suspended brokers for fraudulent behavior. Weinger was personally suspended for 90 days, although he never admitted any wrongdoing.

The final blow came in 1991, when the National Association of Securities Dealers fined the firm $1.4 million for manipulating stock prices. The firm was booted out of the association, and its top officer, Michael Leeds, was banned from the industry.

The NASD expelled the firm after discovering it had marked up the price of stock in a medical supplies company by as much as 112 percent over market price. In its decision, the NASD stated: "In the first day of aftermarket trading, [the firm] exploited the ignorance of their customers by charging unconscionable mark-ups and mark-downs, the excessive amount of which well exceeded $1 million. Such conduct causes irreparable damage to the securities industry and undermines investor confidence in the NASDAQ marketplace. A strong message must be conveyed that the Association will not tolerate these malevolent schemes."

In need of help, Weinger turned to his friend and business partner Joel Nadel in sunny Boca Raton. But Nadel was experiencing some problems of his own.

The SEC had already banned Nadel from the stock market 20 years earlier, but now the commission accused him of accepting bribes to tout worthless penny stocks in his bogus newsletters.

The New York Times, the Boston Globe and several Florida newspapers ran stories on Nadel in the late 1980s and early 1990s, culminating with his participation in the Goldcor scandal.

In Nadel's newsletters, including one from the fictitious "Royal Society of Liechtenstein," he praised a company called Goldcor, whose founders said they invented a process to turn a 20-mile strip of black volcanic Costa Rican beach sand into gold.

"The sands that are removed from the beach are replenished by tidal action only after a few days," wrote Nadel, who was not a partner in Goldcor. The scam was so elaborate that, according to The Washington Post, Goldcor's principals flew prospective investors to Costa Rica in Learjets so they could visit the company's laboratories and watch white-coated scientists turn sand into gold.

In April 1991, the government froze $6.6 million of Nadel's assets; in August, Goldcor President Richard Brown was found in his home with a bullet behind his left ear; in November, a federal judge ordered Goldcor representative Carl Martin to refund $10.8 million to investors. An estimated 3,000 investors lost at least $50 million in the scam. (Martin later opened an herbal products company and was subsequently kidnapped by five men who handcuffed him to a motel toilet and demanded a $3.5 million ransom. Their plan was thwarted when Martin escaped.)

Nadel ultimately was ordered to refund $400,000 to investors.

So, now that both the Royal Society of Liechtenstein and the Royal Society of Cokehounds were kaput, Weinger and Nadel focused on their quiet little company, Quantum Ventures. (Weinger and Nadel did not return our phone calls.)

According to SEC files, Quantum Ventures became Bernard Haldane Associates, a publicly traded company whose subsidiary owned the rights to the Bernard Haldane brand. (At this point, we should point out that there was an actual Bernard Haldane, who was a pioneer in the employment field, and who opened his first, eponymous office in New York in 1947.)

« Previous Page
Next Page »
My Voice Nation Help
Houston Concert Tickets