Ex-stockbroker indicted on felony theft charges

Coleman accused of misappropriating clients' $2.6 million

`Significant step forward'

January 04, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

Monica L. Coleman, the former stockbroker who started a posh downtown Baltimore investment club for wealthy investors, was indicted yesterday by a Baltimore grand jury on 15 counts of felony theft, misappropriation by a fiduciary and securities fraud.

In a one-page statement, the Maryland attorney general's office said Coleman, 44, who launched the now-defunct investment firm Coleman Craten LLC in February 1998, misappropriated $2.6 million from clients and converted the money "to her own personal or business use, never investing [the funds] as she represented to her investors."

Coleman could face a maximum of 15 years in prison and up to a $1,000 fine for each count of felony theft. She could also receive a maximum of five years in prison for each count of misappropriation by a fiduciary, and a maximum of three years and a $50,000 fine for each count of securities fraud.

An arraignment has been scheduled for April 5 in Baltimore Circuit Court.

Howard Nicholson, deputy chief of the criminal investigations division for the attorney general's office, declined to elaborate on the specifics leading to Coleman's indictment. He said the office has been investigating Coleman since spring 1999.

"The attorney general will vigilantly pursue situations such as this," he said.

Coleman Craten filed for bankruptcy protection in May 1999 and never reopened.

Coleman has an unlisted number and could not be reached for comment. Cornelius Carmody, an attorney who has represented Coleman, also could not be reached for comment.

The indictment is a "significant step forward in the process of getting information on where the investors' funds went," said Martin Fletcher, who is counsel to the court-appointed trustee in Coleman Craten's bankruptcy case and Coleman's individual bankruptcy case.

"I think it has been a very difficult time" for the firm's investors, Fletcher said. "We are continuing to investigate potential assets and continuing to evaluate the path by which the investors' funds flowed."

Clinton Black, an attorney representing Dr. Shahid Aziz and Jean Aziz of Columbia, said he did not believe the indictment would result in the recovery of all the money that was allegedly misappropriated by Coleman.

"I don't think economically it is that big of a deal," he said. "To the extent that investors are going to receive any remuneration from all of this, I think that is going to come through the ... bankruptcy court."

Coleman and her partner, John G. Craten - both of whom previously worked at Legg Mason Wood Walker Inc., the Baltimore-based brokerage firm - made a splash in December 1998 when they opened their new headquarters on the ground floor of a building at 7 E. Redwood St.

Craten could not be reached for comment yesterday. Nicholson declined to say whether Craten is under investigation.

Coleman Craten was unlike any other brokerage house in Baltimore. It boasted a restaurant and bar, a billiard room, overstuffed leather chairs in an Elizabethan-style library stocked with thousands of annual reports and prospectuses.

From the outset, Coleman's plans were ambitious. She was determined to hire 400 people, including 120 financial advisory professionals and stockbrokers.

But almost as soon as the doors opened at the Redwood Street office, Coleman Craten was hit with a blizzard of lawsuits.

In March 1999, Shahid and Jean Aziz accused the firm of running a Ponzi scheme and wanted their $765,000 investment returned with $640,000 in promised interest.

Astrid Nielsen Lin, in a similar suit, demanded her $100,000 investment and $203,000 in promised interest.

In April 1999, Charles Schwab & Co. accused Coleman Craten of drawing funds against a bad check.

Craten, a senior partner in the firm, resigned later that month and directed Coleman to remove his name from the company.

On May 7, 1999, a Baltimore Circuit Court judge appointed a receiver to take over operation of the firm after clients James R. and Carol J. Hyde of Towson accused Coleman of embezzling about $2 million of their retirement funds.

That day, Coleman filed for bankruptcy, a move that halted the scheduled foreclosure sale of two Pasadena waterfront properties she owned.

On May 11, 1999, the Maryland securities commissioner ordered the firm and Coleman to stop selling securities and advising investors. The securities commissioner stated that Coleman and the firm committed fraud and violated Maryland securities laws.

The same day, Coleman Craten filed for Chapter 11 bankruptcy protection, a move that ousted the court-appointed receiver and restored Coleman's control of assets.

On Dec. 11, 1999, the attorney general's office announced that it had launched a criminal investigation of Coleman.

Weeks later, the Maryland securities division revoked Coleman's license as a stockbroker and permanently barred her from securities and investment-advisory businesses in the state. In a settlement agreement, Coleman neither admitted nor denied allegations that she violated the Maryland Securities Act.

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