The complaint filed in the US District Court in Manhattan identified the injured funds as the Birmingham Amalgamated Transit Authority Local 725, the Old Dominion Disability and Retirement Allowance Plan and Baltimore-based Chapman Capital Management. Chapman has allegedly suffered losses of more than $40 million from the scheme.
Bond, 40, president and CEO of Albriond Capital Management, has been charged with conducting a scheme that directed virtually all of his profitable stock trades to his own accounts and most of his unprofitable ones to the accounts of those three clients. Incredibly, Bond allegedly undertook the scheme while out of jail on a $1 million personal recognizance bond from trading charges levied against him in 1999.
In December 1999 Bond 8, was charged by the US Attorney’s Office and the SEC with taking nearly $7 million in kickbacks over five years from brokerage firms in connection with his management of some $600 million in customer funds. Bond allegedly directed trades to the brokers through his former money management business, Bond, Procope Capital Management. Bond, who has denied the charges, was scheduled to stand trial in November.
In a separate action yesterday the SEC filed a complaint against Bond and was successful in getting the courts to freeze his assets, including his personal accounts, now valued at about $5.2 million.
Some of Bond’s other clients have included the National Basketball Association, the City University of New York and the Washington Metropolitan Area Transit Authority. Albriond still manages $235 million for as many 50 clients, according to prosecutors.
The new allegations came to light in late July after Neuberger Berman Inc., Bond’s broker-dealer in New York, reported his activities to prosecutors.
From March 2000 until the end of last month, prosecutors
claim that Bond’s account grew to $6.5 million from $263,
360, a gain of more than 5,000%.
Technically, Bond directed 93% of his profitable trades to his account and 83% of his unprofitable trades to his client’s accounts. Prosecutors and court documents allege that Bond’s strategy was to perform day trading and then wait until later in the day or until the close of markets to instruct Neuberger Berman on the direction of trades to his accounts. According to the complaint, this tactic allowed Bond to determine whether trades were profitable or not.
Formally, the complaint charges Bond with six counts of securities fraud and three counts of investment advisory fraud. If convicted, he faces a possible maximum sentence of 75 years in prison. Each securities fraud charge carries a maximum sentence of 10 years while each advisory fraud charge carries a maximum of 5 years. This is in addition to millions of dollars in fines.
Bond’s lawyer, Ted Wells, told a number of news sources that the new charges came as a complete surprise and until he has had a chance to study them, cannot comment.