A former Ferris Baker Watts broker was sentenced yesterday to 33 months in federal prison and ordered to pay restitution for helping a client manipulate the share price of a thinly traded Georgia company.
Stephen J. Glantz, 54, left the brokerage in late 2005 and is the only person connected to Ferris to be criminally charged in the investigation. But the case has ensnared the Baltimore brokerage in a years-long investigation by the Securities and Exchange Commission, which has been coordinating with U.S. Justice Department officials in their probe of the matter.
Glantz, who has admitted to a history of gambling and drug abuse, pleaded guilty in September in U.S. District Court in Cleveland to one count of securities fraud and one count of lying to investigators for his part in the fraud. He remains free on bond.
His client, David A. Dadante, also pleaded guilty to securities fraud and is scheduled to be sentenced today in Cleveland. A former broker for Connecticut-based Advest Group was charged with securities fraud Wednesday for aiding the scheme.
"We remain committed to prosecuting securities brokers who abuse their professional licenses, and we have zero tolerance for those who lie during the course of our investigations," said Justin Roberts, the assistant U.S. attorney prosecuting the case, referring to Glantz.
An attorney for Glantz declined to comment yesterday, and Dadante's attorney has not responded to phone messages this week.
Dadante is accused of operating a $50 million investment fund he launched as a Ponzi scheme, in which initial investors are paid phony returns with deposits from new investors.
Some of the money was diverted to purchase millions of shares in Innotrac Corp., of Duluth, Ga., through accounts Dadante held at Ferris and several other firms. As part of his sentence, the judge ordered Glantz to repay the approximately $110,000 in commissions he earned on those trades.
Glantz admitted to helping Dadante artificially inflate Innotrac's share price by engaging in at least four illegal trading maneuvers. Most of Dadante's illegal trades were placed through Ferris' trading desk and financed in part with money borrowed from the firm.
But court records show that when Dadante's debt to another brokerage grew too large, Glantz helped Dadante by purchasing tens of thousands of his Innotrac shares and placing them in the accounts of other Ferris clients without their knowledge.
Glantz was hired by Ferris in January 2003 and worked in branches in Beachwood, Ohio; Baltimore and Hunt Valley. According to a transcript of a November court hearing, Glantz said he has suffered from a mental illness for years and is taking a variety of medications. He said he also was a regular user of cocaine until March of this year, and has battled a gambling addiction since his father took him to a racetrack for the first time at age 8.
As a broker, Glantz said in some years he made a "seven figure" salary, but often burned through $500,000 to $600,000 a year in gambling losses and drugs. He currently is unemployed and lives in an apartment with his mother in Beachwood, Ohio.
A spokeswoman for Ferris could not be reached yesterday.