Public officials accused of illegal stock trading
RALEIGH (WTVD) -- Former executives of a Raleigh company say dozens of politicians were part of an insider trading ring led by a powerful state senator from Fayetteville.
State ethics forms show at least six public officials owned more than $10,000 in stock from an obscure company, which one legal expert calls "deeply suspicious."
There's nothing wrong with owning stock in an obscure company hardly anyone has heard of, but the claim is some politicians would never have invested in the firm if they were not tipped to some information not available to the public.
Two former executives of Law Enforcement Associates --a technology company-- have written to the U.S. Department of Labor, claiming to have viewed a private company document which lists some 50 state politicians as stock holders, in LEA, a company whose stock typically trades for less than $1 per share.
"I think this is deeply suspicious when you see the kind of herding of politicians who deal with each other day in and day out," Duke Law School Professor Jim Cox said.
Cox, who specializes in securities law, says the apparent "herd investing" looks suspicious also because another politician, North Carolina Senator Tony Rand, is LEA's board chair.
Rand says insider trading claims are silly.
"If they ask me I would have told them one time or another it could be a good investment," Rand said. "You ought to buy it now. What is it, $0.20 to $0.30 a share."
The internal company document and names have not been made public, but state ethics forms do show at least half a dozen public officials have had a least a $10,000 stake in LEA.
Governors Easley and Perdue, former transportation secretary Lyndo Tippett, state Senator Tom Apodaca, and representatives Harold Brubaker and Margaret Dickson have all declared at least a $10,000 stake in LEA at some point over the last three years.
"I think a legitimate question we'd ask them is what peaked their interest in this company," Cox said. "There's literally thousands, tens of thousands of companies that people can invest in."
Dickson, who is also from Fayetteville, said she has lost money on LEA stock.
And Rand says the charges come from a disgruntled, terminated CEO, Paul Feldman.
"We fired the guy," Rand said. "Everyone knows that and he don't like it."
But Cox says he thinks federal regulators will take notice.
"It's deeply suspicious," he said. "So I would be surprised if we don't see at least a governmental investigation here."
The former LEA executives say they have already talked to investigators, but Rand says no one has contacted him.
bev perdue, mike easley, cumberland county, local/state, gerrick brenner
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