Federal prosecutors have charged a New York-based lawyer and businessman with obstruction of justice for allegedly lying to investigators during their inquiry into a questionable stock sale.
According to a criminal information filed yesterday at the U.S. District Court for the District of Columbia, Robert Brown, a partner with New World Merchant Partners, tried to conceal his knowledge of a possible "pump and dump" scheme involving executives from an unnamed investment banking firm in Newport Beach, Calif.
Prosecutors say Brown's activities took place roughly between January 2004 and January 2008, while Brown was a name partner with New York’s Reitler Brown & Rosenblatt, now Reitler Kailas & Rosenblatt. Name partner Scott Rosenblatt confirmed that Brown was a former partner, but said that the charges did not involve the firm directly.
“This matter relates to Bob’s personal activities and does not involve any legal services performed by any member or employee of our firm,” Rosenblatt said.
Criminal informations are generally filed when a defendant has agreed to a plea deal with prosecutors. Brown’s lawyer, Arthur Jakoby, a partner with New York-based Herrick, Feinstein, said in a written statement that his client “accepts full responsibility for what he has done” and “looks forward to resolving this matter,” but did not elaborate.
The names of the individual businessmen and corporations are not included in the criminal information. But according to prosecutors, Brown helped his co-conspirators profit from the fraudulent transfer of more than $25 million to a set of limited liability companies.
Later Brown allegedly helped set up a direct mail marketing operation to promote stock controlled by the businessmen, while obscuring their involvement. The stock was later sold through one of the limited liability companies, generating total proceeds of $200,000. According to prosecutors, Brown personally reaped $69,000 from its sale.
In 2007, The Federal Bureau of Investigation began interviewing Brown and a family member about the business dealings of the limited liability company involved in the stock sale.
According to the court documents, Brown lied to investigators by telling them that his interactions with one of the businessmen “had always been honest,” despite his knowledge of their prior fraudulent transactions. In 2008, Brown later told them that it “would not have been apparent” to him that the company under investigation could have been part of the pump and dump plot.