Investment broker sought in investigation of clients' missing funds surrenders to FBI

Sunday, February 10th 2002, 12:00 am
By: News On 6

CLEVELAND (AP) _ An investment broker who disappeared after he prompted the FBI to investigate $300 million missing from his clients' accounts turned himself in Saturday.

Frank Gruttadauria, manager of a Cleveland office of Lehman Brothers, surrendered at the FBI's downtown office. A federal warrant issued Jan. 25 charges him with making false statements to a financial institution.

Gruttadauria, 44, disappeared with his passport Jan. 11.

He left a letter for the FBI saying he acted alone and didn't take money for personal use, investigators said. He wrote that lax supervision enabled him to misappropriate money over 15 years.

He also wrote his family after he disappeared, apologizing to his mother for putting her through an ordeal. ``I don't know how to live as a fugitive,'' the letter concluded.

His mother and a lawyer for the family did not immediately return calls seeking comment Saturday.

Gruttadauria is scheduled to appear before a U.S. magistrate Monday, the FBI said.

The FBI, Securities and Exchange Commission, National Association of Securities Dealers and Gruttadauria's former employers have been investigating since he disappeared.

Investigators have said they suspect Gruttadauria ran a giant shell game in which his clients' money was transferred into accounts he controlled under fictitious names. Whenever a client needed a withdrawal from an account that was empty, money would be transferred from another client.

Among clients who lost money are businessman Samuel Glazer, a Mr. Coffee co-founder who lost about $30 million and George Forbes, head of the local NAACP and a former president of Cleveland City Council, who lost more than $1 million.

Gruttadauria had worked at Lehman Brothers since October 2000, when the company bought his then-employer, SG Cowen Securities Corp. He worked for Hambrecht & Quist in Chicago from 1987-89.

Gruttadauria is no longer an employee of Lehman, company spokesman William Ahearn said Wednesday.