SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17696 / August 22, 2002
UNITED STATES v. DAVID I. NAMER, Cr. No. 00-20176-M1 (U.S.D.C., W.D. Tenn.); SECURITIES AND EXCHANGE COMMISSION v. DAVID I. NAMER, et al., 97 Civ. 2085 (U.S.D.C., S.D.N.Y.) (MBM)
MEMPHIS FINANCIAL ADVISOR DAVID I. NAMER CONVICTED OF 93 FELONY COUNTS IN $35 MILLION NATIONWIDE SECURITIES FRAUD
The Commission announced today that on August 20, 2002, following a seven-week trial, David I. Namer, a financial advisor based in Memphis, Tennessee, was found guilty by a federal jury of 93 counts of conspiracy, securities fraud, mail fraud, wire fraud, money laundering, and tax evasion. The indictment charged that Namer, 55, masterminded a multi-faceted fraudulent scheme from 1994 through 1996 involving the sale of approximately $35 million of corporate notes to hundreds of investors located throughout the nation. The jury also rendered a separate verdict requiring Namer to forfeit $34.6 million in cash, his house, and shares of stock that he acquired with ill-gotten gains. He has been incarcerated since September 28, 2000. Namer, who has a prior criminal fraud conviction, faces a potential sentence of up to 980 years. Sentencing has been scheduled for November 14, 2002. The case was prosecuted by the United States Attorney's Office for the Western District of Tennessee.
Through its verdict, the jury found that Namer bribed two securities brokers and an insurance company executive; fraudulently sold approximately $23 million of corporate notes that he claimed were insured when there was in fact no insurance in place; diverted almost $2 million of note proceeds to purchase, for his own personal benefit, a fifty-percent interest in a securities brokerage firm; and evaded federal income taxes on approximately $600,000 in income over three years.
More specifically, as charged in the indictment:
- As an incentive to sell various corporate notes, Namer secretly made nine payments totaling $90,000 to Craig Colwell, a broker and Managing Director formerly with Sutter Securities, Inc., a registered broker-dealer based in San Francisco, California.
- Namer also paid bribes totaling $141,155 to another broker, Bruce Barbers, who worked for Meyers Pollock Robbins, Inc., a now-defunct registered broker-dealer formerly based in New York, New York.
- To obtain performance bonds, which Namer purported to use as insurance on some of the note issues, he paid approximately $121,000 in bribes to Richard Quackenbush, formerly the Vice-President of Universal Bonding Insurance Company in Lyndhurst, New Jersey. As a result of the bribes, Quackenbush issued the performance bonds without obtaining the liquid collateral required by Universal Bonding and the reinsurance companies backing the bonds.
- After Namer could no longer obtain performance bonds from Quackenbush, who was terminated by Universal Bonding, Namer sold approximately $23 million of corporate notes that he represented as insured when there was in fact no insurance in place. The issuers of these notes were the Development Authority of Mitchell County, Georgia; Tri Star Financial Corporation; Aircraft Leasing and Funding Company, LLC; Ray & Ross Transport, Inc.; and Northstar Leasing Company, LLC.
- Namer sold $6 million of corporate notes of Ray & Ross Transport, Inc., a bus company in Las Vegas, Nevada, when the company had not approved, and indeed had no knowledge of, the note offering.
- Namer diverted a total of $1,975,000 from the proceeds of the Aircraft Leasing, Ray & Ross, and Northstar Leasing note issues to purchase, for his own personal benefit, a one-half interest in Meyers Pollock Robbins.
- Namer's victims included the Seventh Day Adventist Church Hospital Fund, which purchased $2.5 million of Northstar Leasing notes. Namer falsely represented to a church representative that the notes were insured by performance bonds and that an affiliated company, Northstar Airlines, had entered into a contract to provide regional air service to Northwest Airlines. In fact, the notes were uninsured and Northwest Airlines had terminated all negotiations with Namer and Northstar Airlines after discovering Namer's prior criminal convictions.
Before the trial, six of Namer's co-conspirators entered guilty pleas and agreed to cooperate with the prosecution: Craig Colwell; Bruce Barbers; Richard Quackenbush; Michael Ploshnick, the former president of Meyers Pollock Robbins; Larry Baresel, Namer's in-house attorney; and Frederick J. Smith, the owner of Associated Insurance Agency in Boston, Massachusetts. All of these cooperating witnesses, except Smith, testified at trial against Namer. Mr. Barbers was previously sentenced to a prison term of 68 months; sentencing of the others was delayed until the completion of the trial.
To assist in the investigation and prosecution of the case, the Commission detailed two SEC trial attorneys to the U.S. Attorney's Office in Memphis. In 1997, the Commission also filed a related civil enforcement action against Namer, Meyers Pollock Robbins, Inc., Michael Ploshnick, and others, which has been stayed pending the disposition of the criminal case. In its civil case, the Commission obtained a court-ordered freeze of the $1,975,000 that Namer paid towards a purchase of a fifty percent interest in Meyers Pollock Robbins. The Commission expects that those funds, along with additional funds that Namer will forfeit in the criminal case, will be distributed to defrauded investors.
The Commission wishes to express its appreciation to the United States Attorney's Office for the Western District of Tennessee, the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and NASD Regulation, Inc., for their work on this case.
Indictment in this matter