Legal Ethics

Indicted Partner Acquitted in 1991 Ponzi Case

The Baker & McKenzie partner who was indicted Friday for allegedly taking a $1.7 million kickback in short-selling scheme was acquitted of participating in another investment conspiracy in a 1991 case, the New York Law Journal reports.

In the present case, Martin Weisberg is accused of taking the kickback from two Israeli investors in two companies for which he served as outside counsel. According to prosecutors, the investors knew they would receive large blocks of discounted shares in the companies through so-called PIPEs (private investment in public equity transactions), so they sold the shares short beforehand, later covering their positions with the discounted shares. The scheme allegedly generated about $55 million in profits.

In the 1991 case, Weisberg was accused of helping launder profits for a man who ran a Ponzi scheme disguised as a currency investment company, the legal newspaper says. One of the character witnesses for Weisberg was one of his famous clients, Dick Clark of American Bandstand. Weisberg was the only defendant acquitted. He was a partner with Morgan, Lewis & Bockius during the time he represented the Ponzi defendant.

For most of the time that Weisberg was involved in the alleged short-selling scheme, he was a partner at the now-defunct firm of Jenkens & Gilchrist Parker Chapin. Weisberg’s lawyer says he will be vindicated.

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