U.S. indicts fired trader for Salomon Treasury auction fraud laid to Mozer

January 13, 1993|By New York Times News Service

NEW YORK -- Paul W. Mozer, the former head of the government-bond trading desk at Salomon Bros., was indicted yesterday on four criminal counts for his role in the 1991 Treasury securities bidding scandal.

The indictment by a federal grand jury in New York came a day after a plea agreement between Mr. Mozer and the government collapsed.

In the indictment filed yesterday, the government charged Mr. Mozer with one count of securities fraud, two counts of making false statements about who was bidding for Treasury securities and one count of keeping false books and records.

Had the plea agreement been accepted, Mr. Mozer would have been sentenced on two counts of making false statements.

Stanley S. Arkin, Mr. Mozer's lawyer, assailed the government's decision to pursue an indictment as "outrageous conduct," adding, "We will address it in court."

If he is convicted on all four indictments, Mr. Mozer faces much stiffer penalties than under the failed plea agreement, including a maximum prison sentence of 30 years and fines that could reach as high as $2.5 million.

In the 12-page indictment, Mr. Mozer was charged with breaking Treasury rules that limit the amount of government securities a buyer can purchase at an auction to 35 percent of the securities sold. The violation occurred at an auction of five-year Treasury notes held on Feb. 21, 1991, the indictment said.

Salomon Bros. fired him six months later.

To dupe the Treasury into selling him more than 35 percent of the five-year notes, the indictment contends that Mr. Mozer falsely identified Warburg Asset Management and Mercury Asset Management as bidders for the securities, when Salomon was the true bidder.

Subsequent to that auction, and up to April 1991, the indictment charges Mr. Mozer with keeping false records on Salomon's auction bid ledger sheets, trade tickets and customer confirmations.

In addition to these criminal charges and the potential antitrust action by the Justice Department, Mr. Mozer is accused in a civil lawsuit filed by the Securities and Exchange Commission of falsifying records in eight Treasury auctions from 1989 to 1991.

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