Bank records of 3 relatives subpoenaed

Mother, husband said to have aided Coleman in `lulling investors'

Son's account also probed

`We want to stop her from taking additional money'

Coleman Craten

May 13, 1999|By Sean Somerville and Bill Atkinson | Sean Somerville and Bill Atkinson,SUN STAFF

The state securities division has expanded its investigation of Coleman Craten LLC to include the bank accounts of firm co-founder Monica L. Coleman's mother, husband and son, according to court records.

Baltimore Circuit Judge Joseph H. H. Kaplan on Monday allowed the state to subpoena bank records of those family members without notifying them.

That order came one week after Attorney General J. Joseph Curran Jr. said in a petition to the court that the division believes that Monica Coleman was "very likely" operating a Ponzi scheme through Coleman Craten LLC. He also said her husband and mother "were aware of her investment activities and participated in reassuring and lulling investors." Coleman's minor son, "while not a participant in this scheme, had an account which purportedly was liquidated to pay Coleman's indebtedness," Curran said in the petition seeking a waiver of the notification requirements.

The relatives "are unaware of the extent of the division's investigation," Curran said in the petition. The accounts "may be used to obfuscate the trail of funds from investors, or to hide and protect the profits derived from violations of the Maryland Securities Act."

Monica Coleman could not be reached for comment. Neither she nor her husband returned messages.

The subpoenas order First National Bank of Maryland, NationsBank and First Union National Bank to deliver "the records and information" from the accounts of Monica Coleman's husband, Richard A. Coleman, her mother, Eleanor Harris, and her son to the securities commissioner by May 30.

The subpoenas order the banks to turn over documents that include statements, checks, information about safe deposit boxes, mortgage records, copies of deposited items, corporate resolutions and/or partnership agreements.

Kaplan's order is among the latest in a flurry of developments surrounding Coleman Craten, the downtown business that offered financial services in a club atmosphere at 7 E. Redwood St.

On Tuesday, the company filed for Chapter 11 bankruptcy protection, listing unsecured claims of $5,968,000 and assets of less than $50,000. That followed Coleman's filing for personal bankruptcy liquidation late last week.

Also Tuesday, after a five-week investigation, the securities division ordered Monica Coleman and Coleman Craten to immediately stop selling securities and advising investors.

The 20-page "cease and desist order" stated that Coleman and the firm committed fraud and violated Maryland securities laws. Commissioner Melanie Senter Lubin also is seeking to fine Coleman, revoke her license and permanently bar her from the industry.

"What we are worried about is whether there are sufficient assets to protect the investors," Curran said in an interview Tuesday. "We want to stop her from taking additional money."

Investors, contractors and former employees have filed lawsuits against Coleman Craten seeking more than $4 million.

Curran said his office had tried without success to negotiate an agreement to preserve assets with Coleman.

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