NEWARK, N.J. -
Bert Fingerhut, the 64-year-old former executive with Oppenheimer & Co., pleaded guilty to paying his childhood friend and his nephew to travel the country and execute a variety of methods to qualify for depositor status in the banks, in speculation they would eventually go public in initial public offerings.
The case reinforces suspicions among credit union executives and volunteers that speculators and other well-heeled outsiders are easily able to gain access the lucrative stock offerings of converted credit unions at the expense of long-time members.
Among the 65 offerings were the 1999 IPO for Jade Financial (IGA FCU); the 2002 IPOs for First PacTrust Bancorp (Pacific First FCU) and of Synergy Financial (Synergy FCU); the 2003 IPO for Rainier Pacific Financial Group (Rainier Pacific CU); the 2004 IPOs for K-Fed Bancorp (Kaiser Permanente Employees FCU) and of Atlantic Coast Federal (Atlantic Coast FCU); the 2005 IPO for Heritage Financial Group (AGE FCU) and the 2006 IPO for Viewpoint Bank (Community CU).
Federal savings bank regulations give depositors first crack at IPOs. The 65 offerings were all oversubscribed, so Fingerhut's actions deprived legitimate depositors of access to the stock offerings. Regulators called it the most extensive bank conversion fraud they'd ever seen. Fingerhut, who retired to Aspen, Colo., in 1984 at the age of 40, conducted the scheme over a ten-year period.
Also pleading guilty was Fingerhut's childhood friend, Robert Danetz, a retired New York City schoolteacher. Two other accomplices in the case agreed to settle civil charges brought by the Securities and Exchange Commission, but were not charged in the criminal case against Fingerhut and Danetz.
