Prisoner makes his fortune in New York

Inmate 90T1282 arranges deals by calling father on a pay phone

March 13, 2001|By Tina Kelley | Tina Kelley,NEW YORK TIMES NEWS SERVICE

ELMIRA, N.Y. - On his tax returns, Michael Mathie writes "investor" in the blank reserved for occupation. He claims to have traded upward of $8 million in securities since 1998; in 1999 his adjusted gross income was $899,969, all but a sliver in capital gains. He has also invested in a house for his family on Long Island and four cars, including a $97,000 Dodge Viper. Plus a garage to keep it in.

But here at the Elmira Correctional Facility, a maximum-security prison where the guards call him "our resident millionaire," Mathie is formally known as Inmate 90T1282, who has completed almost 12 years of a 10-to-30-year sentence for manslaughter.

He is also known for advising and helping pay for other inmates' legal efforts, as well as providing free legal advice to his fellow prisoners and stock tips to anyone who asks. Given his successes on Wall Street, people listen.

"It runs the whole gamut, from lawyers to inmates to everybody," he said in a recent interview.

Inmates cannot run their own businesses from prison, but as a state prison official said, they do not give up their right to free speech behind bars. Mathie's investing is not considered a business, since he does not actually make the transactions.

Mathie, 33, has no Internet connection, no cell phone, not even a phone in his cell. He makes his trades by calling his father collect from a pay telephone - up to 10 times a day when the market was more vigorous. His father then places trades on the Internet.

Big telephone bill

"I could be paying a mortgage with what I pay MCI," he said, estimating that he reimburses his father $500 to $1,200 a month for the calls.

He remembers investing in China Prosperity International Holdings, now China Converge, a foreign company that trades on Nasdaq, when China's proposed membership in the World Trade Organization was a hot topic.

"It went from $1 to $10, and the next day it was $18, so I threw $50,000 at it, and called back at 10:30 or 11, and it was at $70," he said. "So I cleared $150,000 and got my $50,000 back in 2 1/2 hours."

He has also taken his lumps, mostly in paper losses, as tech stocks tanked. He gets chills when he recalls the market plunge of August 1998, when he lost $750,000 in market value in 20 minutes.

But he remains a true-believing bull, predicting the Nasdaq will top 6,500 by the end of 2002, up from its current range near 2,200.

"Definitely we're not headed for no recession, and if we do go into a recession, it's because of the media," he said. "It's a self-fulfilling prophecy."

Mathie, a slight man who looks more like a clerk than a killer, was well acquainted with risk - and not the financial kind - when he landed in jail in 1989. He was 21, a high school dropout and former cocaine addict. He and three others were arrested for the murder of Paul Vincent Lamariana, 49, who was hit in the head with a tire iron, choked with an electrical cord, hogtied, stuffed in plastic bags, wrapped in all-weather carpet, and dumped on the side of the road. Mathie admitted to hitting him with the tire iron and choking him.

Mathie says he feels horrible about the killing, which he said was motivated by a belief that Lamariana was abusing the daughter of one of Mathie's co-defendants. He has made inquiries about how he could help Lamariana's family.

"I just wish there was something else I could do other than time," Mathie said. "I have done a lot of self-improvement, made with Paul in mind. That's basically what drives me."

Contacted in California, Lamariana's mother declined to speak to a reporter. Mathie pleaded guilty to manslaughter and conspiracy, but said he did so to get out of Suffolk County jail, where he said he was raped and repeatedly sexually abused by the chief of internal security, Roy Fries.

In 1996 Mathie won a $750,000 settlement in a federal civil suit, where the judge who tried the case ruled the evidence was "overwhelming" and called Fries' acts "an outrageous abuse of power and authority."

No criminal charges were filed in the case, because the Suffolk County district attorney's office found insufficient evidence to prosecute it. (Fries is retired and did not return two phone calls.)

After an appeal, Mathie's award was later reduced to about $500,000. With $75,000 of that, he began trading stocks.

Inmates are not allowed to have computers or to run businesses from prisons, said Jim Flateau, spokesman for the state Department of Correctional Services.

"Certainly since the transaction is occurring outside prison, it's not something over which we would exercise any control," he said. "Inmates have a First Amendment right to discuss whatever they want on the phone," so long as it is legal.

Such behind-bars business is very unusual, said Robert Gangi, executive director of the Correctional Association of New York, a nonprofit policy analysis group.

"Most inmates are poor people, and most inmates wouldn't know a stock exchange from a soccer ball," he said.

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