Five accused of manipulating price of LV company’s stock

Grace Leong

Wednesday, Sept. 20, 2000 | 11:12 a.m.

Five men, including a former IRS attorney and a local stock promoter, were charged Tuesday with conspiring to defraud investors of more than $3 million through the sale of sham securities in what the government called a "boiler-room setup."

The charges include mail fraud, securities fraud, wire fraud, money laundering, false income tax returns filings and tax evasion.

Max C. Tanner, a former IRS attorney who now resides in Las Vegas, and Kevin Ruggiero, a Lyndhurst, N.J.-based securities broker, were named as defendants in a sealed 14-count indictment issued on May 23 by a grand jury. The indictment was unsealed on Aug. 30.

A superceding 37-count indictment issued Tuesday includes three other defendants: Dennis D. Evans, a Las Vegas stock promoter, Kenneth W. Kurtz, a Salt Lake City stock promoter and Mark A. Taylor, a Brooksville, Fla., stock promoter.

The indictment says Tanner and Evans, who arranged to incorporate a Las Vegas residential cleaning services company, Maid Aide Inc., in September 1996, began their securities fraud scheme in 1997 with other defendants by orchestrating an alleged sham merger between Maid Aide and a trucking company, CFE Trucking Co. of Tampa, Fla. Maid Aide became defunct after the alleged merger in July 1998.

To create an aura of legitimacy for the sale of Maid Aide stock, Kurtz allegedly issued a press release on Feb. 27, 1998, through Business Wire, a news services firm, announcing that a letter of intent to merge was signed between Maid Aide and CFE Trucking. The indictment said the first trade of Maid Aide stock on the Over-The-Counter Bulletin Board System was executed on March 2, 1998.

Tanner allegedly arranged to have 345,000 Maid Aide stock certificates delivered via Federal Express from Las Vegas to his brokerage account at a Vancouver, British Columbia-based securities firm and then allegedly sold the shares, with Ruggiero's help, to customers of Ruggiero's employer, Baxter, Banks & Smith Ltd. in New York.

But Lamond Mills, Tanner's attorney, disputed the charges. "Tanner never met Ruggerio personally. He was just acting as an attorney to put together the incorporation and wasn't involved in the sale or promotion of the stock." Ruggiero allegedly received 5 percent of the kickbacks from Tanner and other co-conspirators in exchange for allowing other brokers to use his name and to execute trades through Baxter, Banks & Smith. The brokerage firm wasn't implicated in the indictment.

The indictment said registered brokers and cold callers posing as licensed brokers were allegedly paid undisclosed cash kickbacks equal to between 50 percent and 70 percent of the price of each share sold to induce them to sell the stock. The brokers allegedly issued misleading information about the company to inflate the stock prices.

The defendants generated substantial illegal profits, which they disbursed among themselves, "mostly through nominee bank accounts to conceal the source of the illegal proceeds," the indictment said.

The indictment alleged the price of Maid Aide stock reached a high of $9.37 a share in August 1998 and plummeted to a low of 13 cents about five months later after the defendants stopped selling Maid Aide stock to the public.

Mark Van Wagner, Evans' attorney, and the other defendants could not be reached.

Tanner was arrested on Aug. 2 on charges in the 14-count indictment and subsequently released after his family posted a $650,000 secured bond. He is charged in the current indictment with failing to report about $4 million in stock sale proceeds on his 1996 and 1997 federal income tax returns and evading $800,000 in tax payments.

An arrest warrant was issued for Ruggiero, who remains at large.

Except for Ruggiero, the other four defendants were issued summonses on charges in the 37-count indictment. They are scheduled to appear in court on Oct. 13 for an arraignment hearing.