NEW YORK-Transco Research Corp., a provider of prepaid cellular and wireline calling cards, is at the center of a federal investigation into stock pickers who accept money from the companies they promote.
A grand jury in Federal District Court in Manhattan unsealed a 29-count indictment April 15 against 18 people, including Jerome M. Wenger of Bethesda, Md., host of “The Next Super Stock.” Wenger’s syndicated show is broadcast on New York radio station WEVD 1050-AM and also airs on other stations.
According to the indictment, Alvin E. Bakal, a stock promoter from the New York borough of Brooklyn, obtained secret cash payments from various companies and then paid Wenger and other unnamed talk show hosts to promote the companies on his show. More than $1.2 million in stock in several companies, including Transco, was sold based on false claims by the accused, according to allegations in the court papers.
In one company’s case, the grand jury indictment said Wenger interviewed Transco Research executives on two separate broadcasts of his show in June and publicized Transco’s stock on more than 40 broadcasts of his program. The indictment charged Wenger with two counts of failure to disclose that he was being compensated for promoting the stock.
In June, Transco, which has headquarters on Park Avenue in Manhattan, announced the opening of a new office in Pompano Beach, Fla., to be headed by a new executive vice president, David Kamrat. Kamrat was placed in charge of several divisions, including prepaid cellular, said Guy Cohen, Transco president, in a news release.
In exchange for promoting Transco’s stock, Wenger allegedly received $4,000 in cash and 59,000 shares of the company’s common stock, which he sold for about $73,000.
Transco’s stock, listed on Nasdaq, was trading in the range of 60 cents per share before June, according to Patrick J. Smith, a prosecutor. The share price soon thereafter went to at least $1.40 as outside investors bought the stock and Wenger and other participants in the plan sold their shares in Transco. It had dropped to 38 cents the day before the federal charges were unsealed.
The grand jury indictment said that the toll-free number Wenger gave listeners for additional information on Transco was for a group of unlicensed stock promoters at a brokerage house in lower Manhattan called Wise Choice Discount Brokerage.
Wise Choice is owned by Olawande Agunloye of Brooklyn. He and Bakal sold the stock of these companies from whom they’d obtained payments through Wise Choice and another brokerage firm called Abby Ashford, the indictment charged.
Bakal allegedly used money he obtained illegally from investors to pay $25,000 in gambling debts he owed to Carl Palo III of Holmdel, N.J., and James Ciancia of North Arlington, N.J.
The federal grand jury also charged Palo and Ciancia with operating an illegal sports bookmaking organization.
Additionally, the Securities and Exchange Commission has sued Wenger separately in connection with his on-air promotion of Transco Research.
