New York Man Admits to Running $6 Million Boiler-Room Scheme

A New York man pleaded guilty to running a boiler-room operation in Brooklyn that swindled customers out of more than $6 million, which the con men spent on strip clubs, tanning salons, pharmaceuticals and car washes, prosecutors said.

Alan Labiner, also known as Alan Labineri and David Alan Labiner, entered his plea today before U.S. District Judge Brian M. Cogan in Brooklyn. He previously pleaded not guilty.

Labiner, 52, and Ahmed Awan, 38, controlled a supposed public-relations firm that marketed fraudulent securities in nonpublic companies over the phone, according to the indictment. Two other men who worked for them, Khurram Tanwir and Christopher Posteraro, were also charged in the case. Tanwir, 34, pleaded guilty in March. Awan and Posteraro, 42, are scheduled to change their not-guilty pleas next week.

“The offering memoranda contained numerous misstatements about the entities and their business,” Labiner told Cogan.

His lawyer, Michael Rosen, declined to comment after the hearing.

Labiner pleaded guilty to two counts, mail fraud and conspiracy to commit securities, mail and wire fraud. He faces a maximum prison sentence of 25 years.

Securities Laws

Labiner, Tanwir and Awan, former brokers who had their licenses revoked, faced criminal-contempt charges for violating the judgment in a 2004 U.S. Securities and Exchange Commission case that barred them from breaking securities laws. They were arrested in September 2009. Posteraro was arrested in December 2009.

One of the counts Tanwir pleaded to was criminal contempt.

In 2004, the SEC accused them of engaging in frauds such as making false statements about imminent initial public offerings or big increases in stock prices. The SEC said that Labiner and Tanwir had been allegedly conducting fraudulent stock offerings together since at least 1999.

In December 2008, Labiner was ordered to disgorge $2.75 million and pay a civil penalty of $2.03 million. Tanwir was ordered to disgorge $4.66 million and pay a fine of $3.43 million.

The men are accused in the boiler-room case of defrauding at least 50 investors, according to a 2009 statement from the U.S. Attorney’s Office in Brooklyn.

Four Schemes

They allegedly sold fraudulent securities in four schemes: a purported real-estate investment trust that claimed to invest in Manhattan properties, a business that claimed to invest in credit cards with high interest rates, a company that allegedly sold boxing equipment and clothes, and an enterprise that claimed to manage popular musicians, models and actors.

Victims of the fraud included senior citizens who lost individual retirement account funds, prosecutors said. The men “cold-called” the prospective investors from a site in Brooklyn and told them they had missed a profitable investment opportunity offered in a previous telephone call, which hadn’t been made, according to prosecutors.

The alleged public-relations firm at the center of the scheme was called Locke, Landis & Harriman Inc. and later Landis, Harriman & White Inc., according to the indictment.

The case is U.S. v. Labiner, 09-cv-807, U.S. District Court, Eastern District of New York (Brooklyn).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE