Press Room
January 26, 2002
Letter From Broker on the Run Blames Employers for
Being Lax
The Associated Press
The Cincinnati Enquirer
CLEVELAND--A missing stockbroker said
in a letter to the FBI that lax supervision made
it possible for him to misappropriate money for
15 years, the Plain Dealer reported Friday.
The government is investigating reports that about
25 clients of Frank D. Gruttadauria may have lost at
least $100 million. The FBI and Justice Department
issued an arrest warrant for Mr. Gruttadauria on Friday,
charging him with making false statements to a financial
institution. Wall Street regulators also have been
investigating.
"I can hardly believe that I could have done this
without detection for so long," wrote Mr. Gruttadauria,
45, of suburban Gates Mills, according to the newspaper,
which obtained a copy of the letter.
"The various firms' greed and lack of attention
at the senior level contributed greatly to that. Be
that as it may, I am unwilling to continue and I'm
ashamed and sorry for what I have done."
Mr. Gruttadauria had worked in Cleveland at Lehman
Brothers Inc. since Oct. 10, 2000, when the company
purchased the business of New York-based SG Cowen Securities
Corp., Mr. Gruttadauria's former employer in Cleveland.
He worked for Hambrecht & Quist in Chicago from
1987-89.
Lehman Brothers described the comments as self-serving.
Lawrence L. Klayman, an attorney who specializes in
securities law, said his reading of Mr. Gruttadauria's
comments convinced him that lack of management oversight
played a role.
"It was lax control -- the guy is right," Mr.
Klayman said Friday from his Boca Raton, Fla., office. "I
think it's typical and it happens all over the place."
Mr. Gruttadauria's letter, which was sent to federal
authorities before he disappeared Jan. 11, said he
acted alone and didn't take money for personal use.
"This began as an attempt to make up lost monies
for customers and mushroomed over the course of time," he
said.
Mr. Gruttadauria is suspected of having account statements
for about 25 wealthy people mailed to his post office
box. Then he allegedly forwarded falsified statements
which inflated their value. Mr. Klayman said industry
rules prohibit brokers from holding mail for clients.
Sending multiple statements to the same post office
box should have tipped Mr. Gruttadauria's bosses to
possible problems, he said.
