Federal Deposit Insurance Corporation
Office of Inspector General

Former Wall Street Executive Admits $12 Million Bank Securities Fraud Conspiracy


NEWS, United States Department of Justice, U.S. Attorney, District of New Jersey, 970 Broad Street, Seventh Floor, Newark, New Jersey 07102, Christopher J. Christie, U.S. Attorney

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Assistant U.S. Attorney: arag0504.rel
973-645-2779 May 17, 2007

Former Wall Street Executive Admits $12 Million Bank Securities Fraud Conspiracy

Public Affairs Office 973-645-2888
Michael Drewniak, PAO

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NEWARK, N.J. – A former Wall Street executive and investment banker pleaded guilty today to conspiracy to commit securities fraud in connection with initial public offerings involving mutual banks in New Jersey, Connecticut and across the country, U.S. Attorney Christopher J. Christie announced.

Bert Fingerhut, a former member of the Executive Committee and Director of Research of New York-based Oppenheimer & Company, Inc., admitted that he organized a complex scheme to circumvent applicable federal and state banking regulations that require mutual banks to apportion shares issued in IPOs to depositors, restrict the maximum number of shares offered to such depositors, and prevent depositors from transferring their shares to other depositors.

A mutual bank is a bank owned by depositors. The depositors are entitled to have the opportunity to buy shares in a bank when it converts to a publicly traded company. By secretly and fraudulently amassing shares to which he was not entitled and selling them, Fingerhut and his co-conspirators defrauded eligible depositors and the banks of more than $12 million. Approximately that amount is being forfeited to the government by Fingerhut and a conspirator.

“Fingerhut used his Wall Street acumen to concoct a cunning scheme,” said Christie. “He made millions by robbing everyday depositors of an opportunity to which they were entitled and deserved.”

In a parallel civil proceeding today, the Securities and Exchange Commission charged Fingerhut and three others with violating federal securities laws by fraudulently acquiring stock in 65 public offerings conducted by converting banks. The SEC complaint also charged that Fingerhut, and the others realized more than $12.4 million in illegal profits from the sale of the fraudulently obtained shares.

Fingerhut, 63, admitted before U.S. District Judge Peter G. Sheridan that beginning on or about Dec. 29, 1995 and continuing to on or about Feb. 13, 2007, he implemented a scheme to defraud various mutual savings banks, including, Provident Bank and New Haven Savings Bank, headquartered in Jersey City, N.J., and New Haven, Conn., respectively.

Fingerhut, 63, resides in Aspen, Colo., and Palo Alto, Cal. Fingerhut left Oppenheimer in the early 1980s. The fraud scheme began after his departure from the company.

Another plea hearing involving a second conspirator who allegedly acted as a nominee in establishing accounts at victim banks was scheduled to take place today at about 12:30 p.m. before Judge Sheridan.

Fingerhut admitted that he directed co-conspirators to open depository accounts at, among other banks, Provident and New Haven Savings that he identified as likely to offer its depositors shares in IPOs. Upon announcement by Provident and New Haven Savings that they were offering shares to eligible depositors, Fingerhut directed one of the conspirators to complete stock purchase order forms that falsely represented that the conspirator was purchasing the shares for his own account, when, in reality, he was purchasing the shares with Fingerhut’s money for Fingerhut’s benefit.

Fingerhut further admitted that he directed the conspirator to either transfer the fraudulently obtained shares to him using Ameritrade accounts, or sell the shares on the open market and wire the proceeds him.

Fingerhut pleaded guilty to one count of conspiracy to commit securities fraud, which carries a maximum penalty of five years in prison and a $250,000 fine. Sentencing was scheduled for Sept. 6.

Under the terms of his plea agreement, Fingerhut has agreed to forfeit to the government more than $11 million, representing the proceeds of their illegal activities. The government calculates that Fingerhut’s sentence under the advisory U.S. Sentencing Guidelines at between 57 and 60 months in prison.

Christie credited Special Agents of the Internal Revenue Service, the Federal Deposit Insurance Corporation, the United States Postal Inspection Service, and the Federal Bureau of Investigation for their investigation of the securities fraud conspiracy case. Christie also credited the Securities and Exchange Commission for their participation in the investigation.

The case is being prosecuted by Assistant U.S. Attorney Karl H. Buch of the U.S. Attorney’s Securities and Health Care Fraud Unit.


Defense Counsel: For Fingerhut: Larry Mackey, Esq., Indianapolis, Indiana

Last Updated5/24/07 contact the OIG
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