Fraud case over hidden fee settled
Thursday, May 18th 2000, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) -- Oklahoma turnpike officials and the Internal Revenue Service are sharing in a settlement of at least $4 million that ends a lawsuit filed against Stifel, Nicolaus & Co. and a Japanese bank over a hidden fee from the sale of turnpike bonds in 1992.
Fred Hall, chairman of the Oklahoma Transportation Authority, said the holders of the 1992 turnpike bonds no longer have to worry that the IRS could declare their investment taxable.
"The tax-exempt status is preserved 100 percent," Hall said Wednesday.
The majority of the money from the settlement of the 1995 lawsuit goes to the IRS.
Stifel, Nicolaus & Co., based in St. Louis, was hired to sell $608 million in turnpike bonds.
The Japanese bank's New York subsidiary, Sakura Global Capital, was chosen to invest the sales.
Turnpike officials sued after learning Stifel had collected $6.5 million on the side. The company had been paid a standard fee for
underwriting the sale. Sakura was accused of secretly paying Stifel as a reward for rigging bids on the banking contract.
Turnpike officials said Sakura should have paid the $6.5 million to the state.
"This brings to an end that entire 1992 saga," Hall said. The agency formerly was known as the Oklahoma Turnpike Authority.
"It's the last vestige of that whole debacle. We were victims."
Hall said Stifel and Sakura are splitting the payment evenly.
Stifel, which once dominated the sale of municipal bonds in Oklahoma, closed its offices in the state in 1995 after falling under federal and state investigation. It paid $1.4 million to the Securities and Exchange Commission after the federal agency
complained about Stifel's repeated acceptance of secret fees.
Sakura paid a $250,000 penalty to the Securites and Exchange Commission last year. Steven Strauss, a former Sakura executive, paid a $50,000 penalty.
Robert Cochran, a fired Stifel executive paid $12,500 to Oklahoma's attorney general to settle a civil lawsuit over secret fees. He was sued by turnpike officials, but was not involved in the settlement.
Turnpike officials will not pursue a payment from him.
Cochran insisted that he told turnpike officials about the $6.5 million fee, but turnpike officials dispute that.
The 1992 bond sale refinanced earlier bonds and paid for resurfacing the Turner and Will Rogers turnpikes and for reconstruction of the Muskogee Turnpike.