New York Times Ex-U.S. Attorney Admits Investor Fraud
By DAVID M. HERSZENHORN
Published: December 17, 1998
A former Federal prosecutor, who also served as the top enforcement officer of the Commodity Futures Trading Commission, and a second man have pleaded guilty to racketeering and conspiracy charges in a telemarketing plot that cheated would-be investors of more than $80 million, Federal law enforcement officials announced today.
As part of their plea bargains, John A. Field 3d, a former United States Attorney in West Virginia, who now lives in North Carolina, and Marcus K. Dalton of Colts Neck, N.J., a man described as a professional con artist and telemarketing expert, helped the authorities conduct a sting operation in which Federal agents created a fake mutual fund, purportedly dealing in foreign currencies, and used it to infiltrate operations known as ''boiler rooms'' that sell fraudulent investments to the public.
A main goal of the operation was to search the boiler rooms that agreed to sell the fake mutual fund for information about other fraudulent investment schemes and the people who created them. Investigators said they expected the investigation to lead to dozens of arrests. Nine telemarketers and one boiler-room wholesaler agreed to sell the fake fund, which was called UNEX 2100, and their offices were raided on Tuesday, investigators said.
In addition to Mr. Field and Mr. Dalton, six other defendants pleaded guilty in United States District Court in Newark to charges of conspiracy and mail, securities and wire fraud related to telemarketing schemes, including several that involved selling millions of dollars in worthless investments in wireless cable television licenses. The defendants acknowledged taking enormous sales commissions on the bad investments, and some acknowledged that they simply stole the investors' money.
The guilty plea by Mr. Field, who was United States Attorney for the Southern District of West Virginia from 1972 to 1977 and the director of enforcement for the Commodity Futures Trading Commission from 1977 to 1980, represented a disgrace for a highly regarded prosecutor who won national attention and a reputation for integrity in 1975 when he obtained an indictment of Arch A. Moore Jr., the Governor of West Virginia, on conspiracy and corruption charges.
Mr. Field, 60, pleaded guilty to racketeering on Dec. 4 in United States District Court in Concord, N.H. The racketeering charge stemmed for his work as a lawyer for a boiler-room operator who had been arrested and convicted in New Hampshire. Mr. Field's guilty plea in New Hampshire was sealed until today while Federal authorities completed the undercover operation.
At the time he came to the attention of Federal investigators in New Hampshire, Mr. Field had already been under scrutiny by other law enforcement officials investigating fraudulent investment deals elsewhere, including in New Jersey and Nevada. Federal prosecutors in New Hampshire and New Jersey joined together, and in early 1996 Mr. Field agreed to assist their investigation by working undercover and using his contacts.
In addition to the racketeering charge, Mr. Field pleaded guilty today in Newark to one charge of conspiracy to commit securities, mail and wire fraud. The plea was accepted by Judge Katharine S. Hayden, who also accepted guilty pleas from the other suspects in the case. Mr. Field faces a maximum prison term of 20 years on the racketeering charge, a maximum of five years for the conspiracy charge and fines of $250,000 or more. Because of his cooperation, he is not expected to get the maximum.
The United States Attorney in Newark, Faith S. Hochberg, announced the guilty pleas and the undercover operation at a news conference this afternoon with Paul M. Gagnon, the United States Attorney in New Hampshire, and other officials. Ms. Hochberg called Mr. Field's admission of guilt ''the rock bottom of his slide from protector of the public to predator on the public.''
Mr. Dalton, 45, who was the subject of a September 1995 article in Forbes magazine that described him as a ruthless grifter and telemarketing genius who preyed on the elderly, pleaded guilty on Tuesday to conspiracy to commit racketeering. He faces a maximum sentence of 20 years in prison and fines of $250,000 or more.
Prosecutors said Mr. Dalton concocted fraudulent investment products in commodities, wireless cable systems, specialized mobile radio systems, cellular telephone systems and children's television programming.
Other suspects who pleaded guilty to fraud charges were
Barry Lichtenthal, 54, of Colts Neck, N.J.; Mark Prager, 41, of Solana Beach, Calif.; Robin Clark, 57, of Atlanta; Drew Bagarozy, 38, of Wall Township, N.J.; Howard Wunderlich, 51, of Somerset, N.J., and Thomas Umar, 40, of Belle Mead, N.J. They each face maximum sentences of five years in prison and fines.
In one of the more outlandish uses of the money stolen from investors,
Mr. Lichtenthal, who used the alias Michael Taylor, acknowledged in a court hearing today that he took $265,000 that he collected from investors for a fraudulent venture called Northeast Telecom and used the money to buy toy trains.