Hamptons Mayor Indicted for Securities Fraud

by StockJockey

Thursday, August 28, 2008 - 10:21 am

Most quants would be satisfied with 55% of their trades as winners.

Of course, there are other ways to win on Wall Street. One money-manager discovered a system that resulted in 202 winners out of 204 trades.

Amazing? Perhaps, if his lawyer can get him off:

The mayor of the upscale East End village of Quogue was indicted yesterday on charges of illegally earning at least $1.3 million for his investment firm through securities fraud and impeding a federal investigation by altering firm documents.

Reached at his Quogue home last night, Mayor George Motz said that he was unaware of the federal indictment a grand jury issued in Brooklyn.

“I absolutely have not done anything wrong,” he said. “It makes no sense.” Asked if he would resign, Motz said, “Absolutely not. I’ve done a great job,” and the charges are unrelated to his work as mayor.

According to the indictment filed by Assistant U.S. Attorney James McGovern, Motz, head of the Manhattan investment firm of Melhado, Flynn & Associates, enriched himself and his firm by “cherry-picking,” crediting more profitable stock trades to his firm’s account and the less profitable trades to other customers’ accounts.

When the SEC began investigating Motz’s practices in 2003, Motz, along with others who were not named, illegally altered company records to make it appear as if all the stock trades had been legitimately carried out, according to the indictment.

In one scheme, between November 2002 and September 2003, Motz retroactively credited profitable stock trades to his firm and unprofitable ones to a hedge fund called Third Millennium, the indictment said. The fund’s partners were “primarily high-net-worth individuals,” according to the indictment.

“The fund was marketed to investors based in part on Motz’s track record of success in trading,” the indictment said.

In many cases, the indictment said, Motz waited until the end of a trading day to determine which trades were profitable and which were not.

Between November 2000 and September 2003, Motz assigned 204 of his stock trades to his firm’s own account, the indictment said. Of these, 202 were profitable, the indictment says.

Motz, 66, has been the Quogue mayor for seven years. Most of the village’s 1,300 homes are vacation spots for affluent city dwellers. Elizabeth Taylor and Richard Burton have been summer residents there, according to one local history. Newsday

Innocent until proven guilty..maybe he just has the magic touch.

What do you think?

But clearly keeping up with the Joneses on the East End has its downside. And to be fair, it is not the largest scandal in Quogue.

Rogue interior designers and neon signs have the bastion of Waspi-ness a twitter.

Welcome to the apocalypse, Quogue.
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Quogue mayor indicted on securities fraud
Newsday
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