Penny Stocks King Faces Charges
Wednesday, August 2nd 2000, 12:00 am
By: News On 6
FREEHOLD, N.J. (AP) â€” Robert E. Brennan, the bankrupt financier who once urged potential investors to ``come grow with us'' in TV ads, faces criminal charges for the first time in two decades of clashes with authorities.
Brennan was charged Tuesday in state and federal courts with bankruptcy fraud. Prosecutors say he cashed in nearly $505,000 worth of casino chips in 1995, less than a month after declaring bankruptcy, and attempted to hide it from creditors seeking millions for his penny stock deals.
``He then walked off with a duffel bag full of cash,'' Assistant Attorney General Paul Zoubek said.
State prosecutors had claimed this year in a civil proceeding that Brennan attempted to hide a half-million dollars he got from cashing chips at the Mirage casino in Las Vegas.
The state suggested Brennan, 56, was improperly shielding assets to keep them from being used to pay off the $45 million he agreed to pay to aggrieved investors. Brennan responded that the matter had been ``examined in minutia'' four years ago and was only raised ``to smear and embarrass me.''
The five-count state indictment includes charges that Brennan failed to declare the money. The six-count federal indictment charges him with making false statements in a bankruptcy proceeding.
The state indictment could carry a penalty of up to 10 years in prison. Each of the six federal charges carries a penalty of up to five years in prison.
``We're going to defend this case,'' Brennan said. ``I don't intend to go anywhere.''
His lawyer, Michael Critchley, said Brennan would plead innocent. The suspect posted bail in state court, and was later released by the federal court under house arrest.
Brennan became nationally known in the 1980s through television commercials for his First Jersey Securities Inc.
He declared bankruptcy in 1995, when a federal judge in New York ruled that he cheated First Jersey investors and ordered him to pay what is now more than $78 million to the Securities and Exchange Commission.
The SEC charged Brennan employed ``boiler room'' tactics at First Jersey and manipulated the market in low-cost, high-risk shares of little-known companies â€” the so-called ``penny stocks'' â€” to fleece people who were pursued by a high-pressure sales force.
Brennan also settled a lawsuit brought by New Jersey by agreeing to pay $45 million to investors. That suit said that after closing First Jersey in the late 1980s, Brennan secretly controlled two other brokerages to run similar penny stock scams.
But the SEC and New Jersey authorities say Brennan has consistently sought to hide his assets overseas. He was arrested early Tuesday as he showered at the Colts Neck property where he once had his Due Process Stables.
Outside court, Critchley did not dispute that the casino transaction occurred.
``All I'm saying was that those chips were not assembled on prior trips,'' as prosecutors charge, Critchley said.
Court records indicate Brennan has maintained a lavish lifestyle, flying around the world and dining graciously as part of his job to attract members to a golf club.
However, he has had to relinquish his control of two race tracks and leave the governing board of his alma mater, Seton Hall University, on which he served as chairman.