Tuesday, December 16, 2008
Prior to engaging in criminal conduct, I knew the GLT Fund was losing significant amounts of money. My experience in the brokerage business gave Kenny and me, as well as our superiors at UBS, sufficient reason to believe that Keith was misrepresenting the awful performance of the fund.
Simply said, our goal was to sit back, stay quiet, and let the commissions flow in. Our efforts to maintain plausible deniability crumbled during a meeting I agreed to take with Keith Gilabert and one of our investors. Abe was a Rabbi who was 83 years old and his accountants wanted to meet the principals of the fund in an effort to ease their concerns about their client's asset allocation. Keith asked me to attend the meeting in order to represent the gravitas of UBS. Knowing what I knew about the GLT Fund, I should not have attended the meeting.
"Do you think it wise that an 83 year old man should invest $3 million in growth stocks?" The accountant directed his question at me.
At that moment, I felt like the proverbial deer that had been unexpectedly caught in the headlights. I knew that prior to our meeting, the GLT Fund had assets of less than one million. If the accountants believed that Abe had $3 million in the fund, then clearly, Keith had provided them with fraudulent account statements. Yet, rather than exposing the troubling discrepancy, I ducked the question.
"No," I answered. "UBS is the custodian of the account, although as our letter of disclosure indicated, Keith is solely responsible for allocating client assets."
"We understand that," the accountant persisted, "but would UBS recommend that an elderly client invest his life savings in growth stocks?"
"Although we don't presume to know the investment strategies of those in the GLT Fund, at UBS we typically would recommend a much more conservative allocation for an elderly investor. We would include a much higher percentage of government bonds that produced a fixed income stream."
In constantly trying to dodge the questions, I was lying. Their inquiries gave tangible proof that Keith was perpetuating a fraud. I appeased Abe and his accountants that I would assist Keith in restructuring the account. Yet, when Keith and I were alone, I realized the magnitude of my deception. I had been complicitous in his scheme.
"What did you do to me?" I was livid with Keith.
"Please," Keith pleaded. "Just help me get through this. I have some new accounts coming in that will set things straight with Abe. Do you know how old he is? The truth could kill him. I can make it up. I promise."
Keith was using new investor money to cover losses. It was simply a matter of time before the scheme came crashing down. I didn't now how I could escape unscathed. Had I acted responsibly at that meeting and told the truth, I'd be home and not serving 12 months in a federal prison. Instead, I lied and used that meeting as a springboard to engage in further criminal conduct. Those crimes, however, I will save for a different day and a different blog.
