Guilty plea entered in fraud case

Jace Radke

Friday, Feb. 20, 2004 | 10:14 a.m.

A disbarred Las Vegas attorney pleaded guilty Thursday to charges involving the creation and sale of fraudulent shell corporations as part of a multimillion-dollar securities fraud scheme.

Shawn Hackman, 35, admitted in his plea agreement that from July 1995 to November 2001 he engaged in securities fraud, money laundering, wire fraud and mail fraud, among other charges.

Hackman and four others were named in a 64-count indictment charging them with taking over securities schemes started in the early 1990s by two Las Vegas businessmen.

The group is alleged to have formed shell corporations and then arranged for the shells to be merged with private companies in what is known in the securities industry as a "box job." The conspirators would then sell securities they held without disclosing the hidden control of the stock, according to the indictment.

In essence the group created a "secret" monopoly of the entire supply of a public company's securities, prosecutors said.

The loss from the alleged fraud is estimated to be more than $35 million.

Hackman is facing up to 20 years in prison and a $250,000 fine and is scheduled to be sentenced on May 10.

The other defendants in the case, Daniel Chapman, Herbert Jacobi and Sean Flannigan, all lawyers, and James Farrell, a stock transfer agent, are scheduled to go to trial on June 15 in federal court.

The two businessmen who allegedly began the scheme, Robert Potter and Peter Berney, were already indicted. Potter pleaded guilty to charges in New York, and information regarding Berney's case is sealed.

Potter and Jacobi were also key figures in an unrelated case involving the sale of top secret documents stolen from the Las Vegas office of the FBI. Both were charged in the FBI documents case in 2001, and later pleaded guilty in New York to receiving stolen FBI records and making false statements to the FBI.