Wednesday, March 24, 2004 | 8:58 a.m.
One of the key figures in a group alleged to have created and sold fraudulent shell corporations as part of a multimillion-dollar securities fraud scheme pleaded guilty in a conspiracy to defraud the United States, according to a recently unsealed plea agreement.
Peter Berney, 55, of Las Vegas, entered his plea on Dec. 6, 2001, and has also pleaded guilty to an indictment from the Southern District of New York charging him with securities fraud.
According to the plea agreement, Berney was part of a conspiracy that ran from February 1993 through August 1999 "to defraud the U.S. by knowingly and willfully evading the payment of federal income taxes by deceitful means."
The agreement goes on to state that Berney moved the proceeds from fraudulent securities sales through a maze of brokerage and bank accounts and received more than $35 million. Berney will face up to five years in prison and could be ordered to pay a fine of up to $250,000 as well as restitution to the government, according to the agreement.
The agreement calls for Berney to testify for the government, possibly at a June 15 trial scheduled to be heard by U.S. District Judge James Mahan. The defendants in the case include Daniel Chapman, Herbert Jacobi and Sean Flannigan, all lawyers, and James Farrell, a stock transfer agent.
Shawn Hackman, a disbarred Las Vegas attorney, has previously pleaded guilty to securities fraud in connection with the case.
Hackman and the four defendants were named in a 64-count indictment charging them with taking over securities schemes started in the early 1990s by Berney and another Las Vegas businessman, Robert Potter, who pleaded guilty to securities fraud charges in New York.
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.
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