Broker charged in sale of bad stock in Utah firm

Published: Wednesday, March 12 1997 12:00 a.m. MST

The head of a small Manhattan stock brokerage firm was arrested Tuesday by federal officials and charged with accepting a $100,000 bribe to sell worthless stock in a Utah company to his customers.

Philip John Milligan, the head of J.P. Milligan, was also accused of threatening to beat and shoot employees of his firm if they did not lie to investigators for the Securities and Exchange Commission. He was said to have told some employees, who are immigrants, that it was "the American way" to "say you don't recall - that's how it's done in America."Milligan, 32, of Fort Lee, N.J., was charged with having accepted bribes to get his customers to buy stock in Pilot Transport, a Utah company traded on the over-the-counter bulletin board. Customers of the firm were said to have purchased about 19,000 shares, for $12 each, from November 1995 through February 1996, although Milligan knew the shares were worthless.

The last trade reported for Pilot, a company without operations, was for one-tenth of a penny, last December.

The charges said the fraud was tied to a previous indictment of six men, among them a former SEC lawyer, on stock fraud charges in October. Those charges are still pending. Two of the men indicted in October, Timothy Masley, 38, of Lindenhurst, N.Y., and Grant Curtis, 36, of Danville, Calif., were said in the new charges to be secret part-owners of Milligan's firm.

A lawyer for Milligan did not return a telephone call seeking comment Tuesday afternoon. A call to the Milligan firm was answered by a woman who said, "Just stop calling me," and hung up when a reporter identified himself.

The charges, filed in U.S. district court for the eastern district of New York, in Brooklyn, quoted a number of confidential informants, some of whom were said to have worked for Milligan.

One, said to have been the chief financial officer of the Milligan firm, was said to have advised Milligan that he intended to respond to an SEC subpoena rather than say he could not recall, as Milligan had said he should do. Milligan was said to have responded, "I'm crazy. I'll pop you" and other employees. That was a reference to shooting them, the allegations said.

In the October case, two other stocks were said to have been manipulated.

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