Stock promoter's new troubles sound like his old ones

TRIGAUX E-mail: Click here Archive

© St. Petersburg Times
published January 10, 2003

For readers long acquainted with the Tampa Bay area's business scene, the name Allen Z. Wolfson may well conjure up memories of fraud and shady stock deals. A 1964 Boca Ciega High School graduate turned real estate developer, Wolfson was later convicted of taking fraudulent loans from Tampa's Metropolitan Bank and Trust Co., an institution that failed in 1982.

Metropolitan's chairman at the time? Dick Greco, now the outgoing mayor of Tampa. Wolfson, who was blamed in part for the bank's demise, went to prison. After his release, he moved to Salt Lake City in 1990 to start fresh in real estate and penny stock financing.

It's funny how the new career sounds a lot like the old career.

Wolfson is back in the spotlight this week in, of all places, a Kansas newspaper. The Wichita Eagle reports the owners of downtown Wichita's Oil Trade Center, an 11-story building, say Wolfson took title to the building last year but never paid for it. Wolfson says he had leased the building and planned to buy it. But when the rent from tenants proved inadequate, he says he just handed the building back to the owners.

Simple misunderstanding? Maybe. Wolfson's track record in recent years is awash in iffy deals and alleged stock manipulations that continue to draw federal investigators like bears to honey.

Just some of the highlights:

In September, the Securities and Exchange Commission charged Wolfson, his 23-year-old son, 11 other individuals and a Dallas broker-dealer with securities fraud in a scheme to manipulate the stock of a startup company called Freedom Surf, a maker of wet suits and other surf-related apparel. Here's how the SEC says it worked: Wolfson received 345,000 Freedom Surf shares in 2000 at no cost from a California investor. Wolfson deposited the shares in accounts he controlled at a Salt Lake City brokerage.

Wolfson and son David then directed a local broker and others to post artificially high quotations, bidding up the price of Freedom Surf stock. Through such manipulations, the SEC says, Wolfson helped push Freedom Surf's stock price from $5 to $40 in two months. Many shares were sold at the inflated markups before regulators stepped in and the stock collapsed. (Freedom Surf is now known as Freestar Technologies and under new management.) The SEC case is pending.

In mid 2000, federal prosecutors accused 120 reputed mobsters, executives of Internet startups and stock promoters -- including Wolfson -- of strong-arming brokers and manipulating penny stocks. It was the nation's largest crackdown on securities fraud. Among those named were members of all five New York crime families. One of the stocks involved in the manipulation schemes was ReClaim Inc., a former Tampa company that recycled asphalt roofing shingles for road paving. Since the charges were filed, some of the defendants have pleaded guilty. Wolfson is fighting the charges.

In 1996, federal prosecutors launched a penny stock "sting" operation that led to criminal charges against 45 brokers and promoters. Wolfson was among those accused of offering bribes to undercover agents involving penny stock companies. Prosecutors later dropped the charges only to revive similar accusations in the 2000 crackdown.

In high school, Wolfson voiced a vague desire to attend Stetson Law School. He took a different path. His tale is not yet finished.

Short takes

A TASTE OF HUMBLE PIE: Can a bank conservatively swagger? Such was SunTrust Banks' corporate culture for many years as the institution quietly racked up strong earnings and few dud loans. Lately, profits are sagging and the bank's pride has faded. "The fourth quarter wound up a year we're more than happy to put behind us," SunTrust chief Phil Humann told analysts in a conference call this week. SunTrust, you may recall, tried a few years ago to outbid the larger First Union for the Wachovia banking company. It failed. Can SunTrust regain its old style?

WAS INTERMEDIA JUST A PAWN?: Tampa's Intermedia Communications, a young telecommunications company that blossomed during the late 1990s era of deregulation and rampant growth, loved to boast it could compete against such big-boy competitors as Verizon and BellSouth. But a Fortune magazine article last fall suggests Intermedia fell victim to a bigger game of one-upmanship. WorldCom CEO Bernie Ebbers agreed to buy the company for $6-billion largely because archcompetitor, Global Crossing CEO Gary Winnick, supposedly wanted to buy a business Intermedia controlled, the magazine asserts. Where did this clash of egos lead? Intermedia is defunct. WorldCom became the biggest corporate bankruptcy in U.S. history. Global Crossing is bankrupt. What's wrong with this picture?

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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