Once-prominent money manager found guilty of defrauding clients
Black Enterprise (August 1, 2002) -- In September, money manager Alan Bond will be sentenced to up to 45 years in prison for cheating clients out of millions of dollars. After less than an hour of deliberation in June, a federal jury found Bond, former president and chief investment officer of Albriond Capital Management in New York, guilty on three counts of investment advisory fraud and three counts of wire fraud. Each count of investment fraud carries a maximum sentence of 10 years, and each count of wire fraud carries a maximum sentence of five. Years
At 40, Bond was at the top of his game and was a highly regarded money manager. He had formerly participated in a BLACK ENTERPRISE Investment Roundtable and was a frequent guest on Wall Street Week with Louis Rukeyser.
“I used to enjoy watching Alan Bond on Wall Street Week. I’m very sorry to see that he turned out to be a crook,” said C. Thomas Mason, a member of the board of directors of the Oklahoma-based Public Investors Arbitration Bar Association.
Bond’s reputation started to decline in 1999 when he was accused of taking more than $6 million in kickbacks from brokerage firms over a period of six years. While on bail for those charges, it is believed that Bond cherry picked well-performing stocks for his personal portfolio, and directed underperforming stocks to his clients’ portfolios. The court found that Bond had made $6.3 million from his cherry-picking scheme while his clients lost more than $56 million. The victims of Bond’s scheme were Birmingham Amalgamated Transit Authority Local 725, a union pension fund; Chapman Capital Management (No. 20 on the BE ASSET MANAGERS list); and the Old Dominion Disability and Retirement Allowance Plan, a pension plan for transit workers in Virginia.
“I have been saying for the past 17 years that pension funds are among the most vulnerable,” says Mason, who is also a securities and pension attorney in Tuscon, Arizona. “Specifically in the Bond case, I understand that he may have encouraged the pension plan trustees’ trust and complicity with lavish entertaining and gratuities.”
A graduate of Dartmouth College and Harvard Business School, Bond managed more than $600 million in pension and investment funds for approximately 25 clients, including City University of New York, the National Basketball Association, and the Washington Metropolitan Transit Authority. Sentencing for the investment advisory fraud conviction is scheduled for Sept. 9. Bond is slated to go to trial in November for the kickback charges.
“The federal securities laws have become virtually worthless for civil remedies,” says Mason. Many investors’ rights were taken away because of relaxed securities laws in recent years, he says. “Investors are now more exposed to broker misconduct than at any time since the 1920s.”
Bond joins Kevin Ingram, a former investment all-star at Goldman Sachs, and Raymond J. McClendon, former vice chairman of Pryor, McClendon, Counts & Co., once the nation’s largest black-owned investment bank, on the list of prominent African American financial industry professionals who fell from grace. Ingram was arrested and jailed in Florida in June of last year on money laundering charges, while, during that same summer, McClendon was convicted in an Atlanta federal court of 28 counts of mail fraud.
The Rise and Fall of Alan Bond
- 1961: Born in New York.
- 1987: Graduates from Harvard Graduate School of Business;lands job as an institutional sales associate at Goldman Sachs & Co.
- 1989-91: Works as a portfolio manager, W.R. Lazard & Co.;becomes a regular on Wall Street Week with Louis Rukeyser.
- October 1991: Becomes CEO of Bond Procope Capital Management; signs on NBA players’ pension fund as a client.
- End of 1993: Has 30 clients and manages about $278 million.
- Early 1998: SEC starts investigating Bond’s activities.
- April 1999: Bond’s assets under management peak at $640 million, according to SEC filings.
- December 1999: Bond is indicted and charged with taking$6.9 million in a kickback scheme.
- End of 2000: Bond’s assets under management plunge to about$123 million.
- August 2001: Bond is indicted again on a separate charge forexecuting more than $50 million in unprofitable trades.