Trial to begin for three defendants in stock case

Kim Smith

Friday, Oct. 22, 1999 | 10:56 a.m.

Jury selection begins Monday in the trial of three men accused of making millions of dollars by fraudulently issuing millions of shares of stock in the early 1990s.

Michael Swan, Keith Shwayder and Kevin Orton are the only defendants remaining in a 30-defendant case. The others either entered plea agreements or were convicted in earlier trials.

The trial, which is expected to last at least six weeks, will be presided over by U.S. District Judge Philip Pro.

Swan, Shwayder, Orton and the others were indicted in November 1996 on a variety of charges involving the stock of Telek Inc. and United Payphone Services Inc.

Swan was the president of United Payphone Services and director of Teletek; Shwayder was president of Teletek and Orton was the certified public accountant for both companies.

The 82-page indictment accuses the men of bribing stockbrokers, stock promoters and market makers with millions of dollars of cash and stock so they would sell the common stock of the two companies.

The indictment read, "Some of the bribes were paid in Las Vegas, Nevada, and some were paid by placing thousands of dollars of cash in Federal Express envelopes and sending the envelopes from Nevada and Salt Lake City, Utah to stock promoters and stock brokers."

The indictment alleges the men caused two different types of stock to be issued although by law they were only supposed to be issued to people who had performed bona fide services for the companies, such as employees. The stocks were then sold to unsuspecting public investors and the proceeds split between the men and the companies, the indictment states.

The men also caused false information about the companies' financial statements and annual and quarterly reports to be fed to NASDAQ, according to the indictment.

Authorities believe the men engaged in insider trading, manipulated the volume and price of the stock and laundered the illegal proceedings.

If convicted, Swan and Orton may have to forfeit in excess of $3.2 million in property to the government and Shwayder would have to forfeit more than $349,000 in property.