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20 - ORGANIZATIONS/PRIVATE/Towers Financial Corporation.md
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@ -61,7 +61,7 @@ Money raised from new investors was used to pay returns and redemptions to earli
The Securities and Exchange Commission sued Towers, Hoffenberg, the chief operating officer [[Mitchell Brater]] and [[Arthur J. Ferro]] in February 1993 (SEC v. Towers Financial Corporation, 93 Civ. 0744 (WK), S.D.N.Y., before Judge [[Whitman Knapp]]), and in March 1993 the company filed for protection under Chapter 11 of the Bankruptcy Code (In re Towers Financial Corporation, No. 93-B41558). The Commission later sued Marvin E. Basson and Charles H. Chugerman in 1994, obtained a consent judgment against Hoffenberg, and in September 1996 charged [[Michael Rosoff]], Towers's chief legal officer since 1980, with participating in the fraudulent note sales. The SEC regional director whose office brought the charges, Richard Walker, declined to discuss the case in 2019.[^1][^2][^5][^6] Corrigan turned his committee's investigation over to the SEC, whose charges did not involve Epstein.[^6] The matter became one of the largest financial frauds in the [[United States]] before that of [[Bernard Madoff]].[^6]
Hoffenberg was indicted in the Northern District of Illinois on April 19, 1994 and in the Southern District of New York on April 20, 1994; the Illinois case was transferred to New York in April 1995. He pleaded guilty on April 20, 1995 to conspiracy to commit securities fraud, mail fraud, conspiracy to obstruct justice and tax evasion (United States v. Hoffenberg, 94 Cr. 213 (RWS) and 95 Cr. 321 (RWS)). Judge [[Robert W. Sweet]] issued his sentencing opinion on March 4, 1997 and entered judgment on March 7, 1997: 20 years in prison, three years of supervised release, a one million dollar fine and restitution of 475,157,340 dollars, the figure the Bankruptcy Court had fixed in April 1996 as the valid claims of the noteholders and bondholders, which with interest the investors put at about one billion dollars by 2018. Brater and Rosoff received prison sentences of seven to nine years. Hoffenberg was released from federal custody on October 11, 2013.[^1][^5][^6][^8] The 1993 prosecution was led by Daniel Nardello, who went into private practice soon afterward.[^6]
Hoffenberg was indicted in the Northern District of Illinois on April 19, 1994 and in the [[U.S. Attorney's Office for the Southern District of New York|Southern District of New York]] on April 20, 1994; the Illinois case was transferred to New York in April 1995. He pleaded guilty on April 20, 1995 to conspiracy to commit securities fraud, mail fraud, conspiracy to obstruct justice and tax evasion (United States v. Hoffenberg, 94 Cr. 213 (RWS) and 95 Cr. 321 (RWS)). Judge [[Robert W. Sweet]] issued his sentencing opinion on March 4, 1997 and entered judgment on March 7, 1997: 20 years in prison, three years of supervised release, a one million dollar fine and restitution of 475,157,340 dollars, the figure the Bankruptcy Court had fixed in April 1996 as the valid claims of the noteholders and bondholders, which with interest the investors put at about one billion dollars by 2018. Brater and Rosoff received prison sentences of seven to nine years. Hoffenberg was released from federal custody on October 11, 2013.[^1][^5][^6][^8] The 1993 prosecution was led by Daniel Nardello, who went into private practice soon afterward.[^6]
The attempted corporate takeovers drove much of the cash drain. Beginning in November 1987 Hoffenberg used Towers and the captive Illinois insurers to mount unsuccessful bids for [[Pan American World Airways|Pan Am]] and, in 1988, [[Emery Air Freight]], deploying Jeffrey Epstein as a financial adviser on the financing; a 1987 Towers press release said Towers would use 3 million dollars from United Diversified toward the Pan Am bid.[^4][^6] The Pan Am effort collapsed amid the airline's broader decline following the December 1988 bombing of [[Pan Am Flight 103]] over Lockerbie, and the failed raids left the insurers depleted and accelerated regulatory scrutiny of Towers.[^6] The Illinois Department of Insurance liquidated the insurers and sued Hoffenberg in 1991; he settled. The regulators' lawyer, Barry Gross, said of Epstein: "He was very elusive... It was hard to really track him down. There were a substantial number of checks for significant dollars that were paid to him, I remember... we presumed that he was involved with the Pan Am and Emery run that Hoffenberg made, but we never got a chance to depose him."[^4]