|PRESSURED PEERS By CHRISTOPHER BYRON |
April 4, 2005 --
IT will perhaps prove helpful at the start of this column to remind ourselves that during those the first few hours after the attacks of 9/11, the glue that held this nation together pretty much consisted of the courage and grace under pressure of just one man: New York Mayor Rudy Giuliani.
So, for that alone he warrants our praise and admiration, and a place in the pantheon of American heroes.
But with that heightened visibility as a national leader comes a heightened obligation to live one's life in a way that we'd want the rest of the nation to admire and emulate.
And that means there is one thing you absolutely, categorically do not do — at least if you happen to be a former federal prosecutor who first achieved national stature by pursuing some of America's nastiest and most vicious Mafiosi and Wall Street's slipperiest white-collar swindlers and cheats.
Specifically, you do not let yourself become entangled in the penny stock antics of a white-collar felon now awaiting sentencing on a stock swindle linked to La Cosa Nosta's Colombo crime family.
Yet that is exactly what Giuliani has done. And worse still, news of the matter comes close on the heels of similar-type revelations last January that derailed President Bush's choice of Giuliani's then-business partner, Bernard Kerik, to become Homeland Security czar.
No facts have yet emerged to suggest that Giuliani acted improperly or illegally in either of these matters. But that is not the point, because the real issue here involves the man's obvious and appalling lack of judgment when it comes to choosing business partners.
Reports first appeared last month in USA Today that Giuliani Partners — the business consulting firm that Hizzoner founded after returning to private life in 2002 — is providing consulting services to a dodgy penny-stock outfit called Applied DNA Sciences Inc.
Now further details have emerged regarding the founder and principal stockholder of Applied DNA Sciences, Richard H. Langley Jr., a convicted Wall Street felon who pleaded guilty to 1996 securities fraud charges brought by federal prosecutors in the New York office Giuliani once headed.
LANGLEY, 42, has a his tory of entanglements with the Wall Street underworld that spans nearly a decade. Government records show that in 1996, while working as a self-employed stock promoter out of an office in Los Angeles, Langley tried to bribe an undercover FBI operative pretending to be a crooked New York stockbroker, to pump up the price of an Over-The-Counter penny stock called Pollution Controls International, Inc.
For this, Langley was charged with conspiracy to commit securities fraud in an October 1996 FBI raid that netted 45 crooked brokers and CEOs around the country. Yet action in Pollution Controls International continued unabated, as the company simply changed its name to Scottsdale Cigar Inc., and a new crew of manipulators stepped to the plate.
They were led by a reputed Colombo crime family associate named Frank Rizzo, who the government eventually charges with masterminding an international scam involving the company's shares.
And though the criminal docket sheet in Langley's case indicates that he pleaded guilty, he has yet to be sentenced and has been free to travel to Europe and elsewhere for at least the last three years, suggesting plainly enough that he is being used as a government informant in various ongoing investigations.
Whether in that capacity or otherwise, Langley continued to conduct business with Wall Street's criminal underworld, and in 1997 he teamed up with a Melville, L.I., swindler named Ira A. Monas who had taken over a New York-based penny stock company called Firamada Inc. and hired a convicted child molester named Orville Baldridge to talk up its stock around Wall Street.
From his perch at Firamada, Monas helped form a penny stock shell called ProHealth Medical Technologies Inc., which Langley took over and renamed as Applied DNA Sciences Inc.
Langley's plan: To use the shell as a vehicle to promote a new technology, supposedly being developed in Taiwan, to embed minute traces of plant DNA in commercial products as a way to spot knock-offs and counterfeits.
This is the company that Giuliani Partners is itself now promoting, and you'd have to look long and hard to find an uglier group of Wall Street rogues than those associated with it at one time or another since its founding three years ago.
AFTER helping set up the ProHealth Med ical shell, Monas was arrested, convicted and sent to prison for an earlier, and unrelated, check-kiting spree. And his criminal pursuits continued even from behind bars, where he ran an Internet stock-hyping scam using the prison payphone and a 15-year-old boy from New Jersey named Jonathan Ledbed.
As for Applied DNA Sciences, no sooner was it formed than it signed a licensing deal with a Taiwanese company called Biowell Technology Inc., which claimed to hold the DNA breakthroughs. With all of $83 in balance sheet cash to its name, the company next signed up an ultra-fishy investment firm called Vertical Capital Partners to raise money for it.
In August of 2004, the National Association of Securities Dealers censured and fined both Vertical Capital and its president at the time, Ronald Heineman, for improperly marketing a 1998 IPO, and barred them from issuing any investment reports until February of 2005.
By August of last summer, Applied DNA Sciences faced looming bankruptcy. Yet the company nonetheless managed to raise a bit more than $1 million through the sale of promissory notes.
With their kitty thus replenished, the brass marched in the door of Giuliani Partners bearing a $2 million consulting contract ($500,000 down and the rest in subsequent quarters) along with 21 million shares of stock as a bonus, and thereupon signed up Hizzoner's firm to drum up business for the company.
When I asked the firm's designated hitter on this topic — one Steve Oesterle — why Giuliani Partners would want to get involved with such a slimy operation, he said Giuliani Partners wasn't interested in the past and was more interested in the future and the potential of Biowell's DNA technology.
But had anyone from Giuliani Partners actually gone to Taiwan to kick the tires on this intriguing Biowell outfit? Or why, if its technology was so valuable, it would be willing to get in bed with a bunch of stock market criminals in the first place?
Uh, no, explained, Oesterle, hurrying to offer reassurances that Giuliani Partners' "due diligence" was continuing.
Meanwhile, Applied DNA managed to work the name of Giuliani Partners into a company filing with the SEC on Nov. 10, sending its shares scooting from 50 cents to $1.01 in the following two trading days, and thereafter to a high of nearly $2.40 by the start of December.
Now, predictably, the price is falling again, and who should turn up as the biggest seller on Wall Street, helping drive the stock down, penny by penny, every step of the way? Richard Langley, who else? What a guy! And while we're on the subject, how about that sharp-as-a-tack former mayor? Way to go, Rudy, no flies on you!