State claims Brennan is shielding assets to avoid paying $45 million

Wednesday, March 1, 2000 | 12:29 p.m.

Also being sought is $187,000 prosecutors froze in an account they claim Brennan devised as a sham "pension trust" for himself.

"We're still going after his money," attorney general's office spokesman Chuck Davis said Wednesday.

Brennan is again expected to be acting as his own lawyer at a hearing scheduled here Friday before state Superior Court Judge Philip M. Freedman.

Freedman oversaw a settlement reached in June in which the former penny stock tycoon agreed to pay $45 million to avoid a civil trial. The state Bureau of Securities would use the money to compensate investors state regulators believe Brennan swindled.

In the settlement, Brennan denied wrongdoing, but consented to a finding that he used "substantial influence" at two brokerages to make "unreasonably excessive profits" in low-cost stocks in which he held an undisclosed interest from 1988-95.

Davis said Brennan is paying $3,000 a month. At that rate, the debt would be retired in 1,250 years.

The deal also called for the state to get $55 million for investors from Brennan's businesses, which are now under the control of a bankruptcy trustee.

The collection efforts are the latest chapter in a 15-year saga in which state and federal regulators have repeatedly sued the former Brielle resident. He was barred in 1998 by the U.S. Securities and Exchange Commission from the securities industry.

Brennan, 56, became nationally known in the 1980s through television commercials for his First Jersey Securities Inc. in which he stepped from a helicopter and told investors to "come grow with us." The company has been inactive since 1987.

He declared bankruptcy in 1995, soon after a federal judge in New York ruled that he cheated First Jersey investors and ordered him to pay what is now more than $78 million to the SEC, which would reimburse investors.

In a court filing this week, the state charged that a month after seeking bankruptcy protection, Brennan cashed in nearly $505,000 of chips at The Mirage casino in Las Vegas.

The proceeds were not reported in bankruptcy documents Brennan has filed since, or to the Internal Revenue Service, the state claims. That could leave Brennan vulnerable to federal charges of bankruptcy fraud or failing to report a cash transaction exceeding $10,000.

"At this point, there are no charges," Michael Drewniak, a spokesman for the U.S. attorney's office in Newark, said Wednesday.

Judith Starr, a federal Securities and Exchange Commission lawyer, told The Star-Ledger of Newark in Wednesday's editions that the transaction "was discovered through independent investigation." She did not immediately return a call Wednesday.

Brennan, who now lives in Juno Beach, Fla., did not return a message left at his office at Due Process Stables in Colts Neck, N.J., his one-time horse farm that is now a private golf course.

A Mirage memo on Brennan's cashout, part of the state's court filing, said casino employees initially "could not verify where the customer had gotten the chips. It was determined that $171K was substantially wagered, and the balance of $333,794 was apparently accumulated from previous trips."

The Mirage said "substantially wagered" refers to money that was then in play, either in the form of recently purchased chips or recent winnings.

Another casino document shows Brennan was a high roller, with an average bet of $17,369 over the course of four visits. On one trip, he won $196,000, but on the other three he lost from $103,000 to $375,000.

An earlier state filing also accused Brennan of hiding assets, claiming he spent nearly $51,000 last year traveling in Europe and to Las Vegas.