FBI affidavit says broker made up false accounts for 110 clients, inflated values by millions

Monday, February 11th 2002, 12:00 am
By: News On 6

CLEVELAND (AP) _ A stockbroker suspected of defrauding clients kept false accounts for about 110 customers and inflated their values by $277 million, according to an FBI affidavit unsealed Monday.

Frank Gruttadauria, 44, is suspected of conducting a 15-year scam while working as a broker for various firms, including SG Cowen Corp. and Lehman Brothers Inc.

He disappeared Jan. 11 but surrendered to the FBI in Cleveland on Saturday and was being held without bail.

He was charged with making false statements to a financial institution.

The charge stems from a $6 million line of credit Gruttadauria received in December from National City Bank. According to the affidavit, he told the bank he had $13 million in assets in a Lehman Brothers account, but the account actually had a value of $6.55.

Gruttadauria, of suburban Gates Mills, drew $700,000 from the line of credit on Dec. 21, and $300,000 on Jan. 9, the affidavit alleges.

Gruttadauria's computer records showed the accounts for the 110 clients were worth a total of $289 million while Lehman Brothers' official records showed they were worth $12 million, the FBI said.

When Gruttadauria disappeared, he sent a letter to the FBI admitting he had stolen from investors, the affidavit said. He also left behind data that he said would detail his years of shifting money from one account to another until the money ran out.

FBI agents said Saturday that during Gruttadauria's time on the run he had been in Colorado Springs, Colo.; Buffalo, N.Y., and Cleveland. Agents found his car three days ago in the Cleveland area.

One of his former clients, real-estate developer Bob Fazio, said Sunday that he wanted Gruttadauria to divulge whatever information he has about client accounts.

``I want to resolve this as fast as I can and get on with my life,'' Fazio said.