Law enforcement officials think Utahn Michael Drew Wright has interesting friends. Investigators first took an interest in him in the early 1980s when he worked for convicted Utah scam artist Grant Affleck, helping to sell promissory notes of AFCO Investment Corp. That interest resulted in a state lawsuit accusing Wright of securities fraud. (See related story on A7.)
Then, in 1985, Wright was arrested on theft-by-receiving charges together with another business associate _ Kole Drew Johnson _ who, according to court documents, had learned the talents of picking locks, converting submachine guns to fully automatic weapons and making his own silencers.But now authorities are more intrigued by the people Wright has been hanging out with lately, including Thomas F. Quinn, a disbarred New York lawyer and former stockbroker _ now in prison _ with ties to the former head of the Genovese Mafia family, and a Quinn associate, Arnold "Charlie" Kimmes.
In court affidavits filed to support search warrants in Utah, Colorado and California, the Internal Revenue Service alleges that Wright, Kimmes and Quinn worked together to manufacture, manipulate and grossly inflate the stock price of several Utah-related blind pool corporations and foist the shares off on unsuspecting investors.
Wright has not been charged with anything, but he's named in the IRS affidavits as a target of a criminal fraud probe. The Las Vegas IRS special agent who sought the search warrants declined to discuss the case, citing secrecy rules of the federal grand jury investigation.
Wright isn't talking right now either. His Las Vegas attorney, Donald J. Campbell, said his client will respond at some point "to many of the inaccuracies and misrepresentations which have appeared of late," but, "unlike others associated with this controversy, we do not choose to utilize the press as a forum to besmirch and assassinate the character of others."
Wright's alleged associate, Quinn, has been sitting in a
Paris prison since being arrested last July on an investigative warrant at his $6.5 million villa near Cannes. The arrest was one of more than 20 carried out in conjunction with coordinated raids by European officials on several boiler-room stock brokerages around the Continent.
Quinn's U.S. lawyer said he couldn't discuss Quinn's activities or any of the people he had dealt with. The attorney said only that Quinn is maintaining his innocence in France.
The attorney for Wright's other alleged associate, Kimmes, would say only that his client "had no involvement with Thomas Quinn's operations in Europe ever."
Kimmes, who was visiting Quinn in France last July when Quinn was arrested, is talking in detail to American authorities about his role in the U.S. end of the blind pool swindle, the IRS says.
One of the people the IRS says he is talking about is his old friend Michael Wright.
Kimmes told the IRS he and Wright have been working together since about 1984, after meeting in 1983. The IRS affidavits say Wright, Kimmes and Quinn jointly funded a captive brokerage, Chelsea Securities Inc., which was used in the manipulation of the stocks created by Wright and Kimmes.
In addition to Chelsea Securities Inc., which started in Salt Lake City and later moved to Newport Beach, Calif., the IRS affidavits note that Chelsea Securities B.V. was established in Europe as a branch office.
Actually, there were two European Chelseas involved in selling the stock of several Utah-born companies, said Swiss prosecuting magistrate Laurent Kasper-Ansermet, one of the officials trying to unravel the international stock scam.
Kasper-Ansermet told the Deseret News that Chelsea Securities B.V., which was established in the Netherlands, closed after the Dutch tightened their securities laws, but Chelsea Financial A.G. operated in Basel, Switzerland, until last summer.
One of the targets of Kasper-Ansermet's investigation, a man named Kurt Meier, was arrested recently in Spain in connection with the Swiss probe. The Swiss magistrate told the Deseret News that officials believe Quinn, Meier, Kimmes and Wright arranged approximately two years ago for Kimmes and Wright to sell shares of companies to Meier and Quinn, who in turn would arrange for stock sales through brokerages in Europe.
The IRS claims that some of the stocks produced by Wright and Kimmes, and subsequently sold at grossly inflated prices, were sold overseas, while others were sold through and to cooperative brokerages in the United States.
Domestic brokerages named as having been involved included Blinder Robinson Co. Inc. in Denver and the now-defunct Stoneridge Securities Inc. in Las Vegas.
Blinder Robinson _ a major penny brokerage that the Securities and Exchange Commission has pursued for years _ was alleged by the IRS to have done more than facilitate trades.
Kimmes told the IRS that Blinder Robinson and its president, Meyer Blinder, bought control of 16 of the public corporations that he and Wright had put together, then marketed their stock through its nationwide telephone sales force.
Alan C. Jacobson, a Colorado attorney representing Blinder Robinson and Meyer Blinder, said his clients deny any wrongdoing. He said one of the problems with the government's investigation is that it was done by an IRS agent not familiar with securities matters.
"What he is sort of suggesting to be sinister and so forth, the vast majority of that was not only lawful but was fully disclosed to the SEC a long time ago," Jacobson said.
Thomas Fehn, a longtime Kimmes acquaintance and the attorney for both Stoneridge and its president, made what he termed "an educated guess" that the blind pools Blinder bought and retailed represented about a third of the total created by Kimmes and Wright.
Fehn said some of the others were retailed overseas and still others remained in the United States throughout their life cycle and were retailed by various brokerages around the country.
Fehn said Stoneridge's president, Ronald Wheeler Sr., and his son, Ronald Wheeler Jr., were "relatively unsophisticated people" used as pawns in the stock manipulations by Wright and Kimmes.
He denied any relationship between Stoneridge and Quinn. A Chicago broker told the Deseret News that George Samaris _ a name the broker said he later learned was a Quinn alias _ had directed him to Stoneridge to obtain shares of one of the companies Fehn identified as a Wright-Kimmes creation.
The SEC recently filed a lawsuit against Stoneridge, alleging manipulation of the stock of two companies, including one that Fehn confirmed was a Wright-Kimmes deal. The SEC says the money from the initial public offering of that corporation _ SRS Technical Inc. _ went to a Utah company called Executive Services, which has been linked to Wright by the IRS.
-Next: From Murray to Europe: Executive services.
2 terms to know
Boiler room: A room equipped with many telephones, used for high-pressure sales of securities and other products, which may or may not have value.
Blind pool: Also called a blank check-a corporation that makes its initial public stock offering with little or no stated business purpose; usually potential investors are just told management will seek profitable ventures with which to mergo or otherwise combine.