Foundation attorney indicted on securities fraud


United Stations, Broadcasters’ Foundation attorney indicted on securities fraud. Nick Verbitsky’s/United Stations’ Corporate Counsel lawyer, Marty Weisberg has been indicted for securities fraud and other offenses Friday in an alleged kickback scheme involving PIPEs (private investment in public equity) transactions by Xybernaut Corp. and Ramp Corp., reported Dow Jones.

Weisberg, a big deal-maker for United Stations, was also Dick Clark Productions’ attorney and on the board. He is also Corporate Counsel to the Broadcasters’ Foundation, and on their board as a director. Weisberg was also federally indicted in 1990 but found not guilty in front of a jury.
Excerpts from the Dow Jones story: The indictment names Weisberg, a New York partner of Chicago law firm Baker & McKenzie and one-time Xybernaut director; Edward Newman, Xybernaut’s ex-CEO; his brother Steven Newman, another former Xybernaut executive; Andrew Brown, Ramp’s former President/COO; and Israeli investors Zev Saltsman and Menachem Eitan. Ramp is a New York health-care software company, and Xybernaut, a Fairfax, Va., developer of portable computer hardware.

The individuals face a variety of charges including conspiracy, securities fraud and money laundering, according to the Dow Jones story. They each face up to 20 years in prison on each count of money laundering and securities fraud. The Securities and Exchange Commission also has filed civil charges in the matter.

Prosecutors have alleged the defendants, between 2001 and 2005, engaged in a scheme to defraud shareholders of Xybernaut and Ramp by issuing hundreds of millions of discounted shares in PIPEs transactions to entities controlled by Saltsman and Eitan, according to the indictment. The defendants also failed to make required filings with the SEC in order to conceal their scheme, prosecutors said.

In a press release, the U.S. Attorney’s office said Weisberg kept about 1.7 million of 3.1 million paid by Saltsman and Eitan and then transferred about 1.4 million to Steven Newman, 61 years old. He also arranged for the transmission of 100,000 of proceeds from one of Xybernaut’s PIPE transactions to Edward Newman, 64 years old, the government said. Companies typically turn to PIPE transactions when they are too weak to raise money through traditional stock sales. Since share prices tend to decline upon the announcement of a private placement, investors with advance knowledge can reap big profits by selling borrowed shares and then buying them back at a lower price once the private offering is announced.

Abramowitz, Weisberg’s lawyer, said his client is out of the country and will likely be arraigned on the charges when he returns on Monday.
In a statement, Baker & McKenzie said Weisberg, who joined the firm in 2005, is on leave until the matter is resolved. Weisberg was a partner at now-defunct Jenkens & Gilchrist LLP during the period of the alleged crimes.

RBR/TVBR observation: Note that this has no bearing on the day-to-day operations of United Stations or Broadcasters’ Foundation. They both will likely retain other counsel until the matter is resolved.