Bank stock scheme trips Aspen man

James Paton, Rocky Mountain News

Thursday, May 17, 2007

Bert Fingerhut, an Aspen businessman, conservationist and former Wall Street executive, pleaded guilty Wednesday to a charge he made $11 million by selling illegally obtained bank stocks.

"I am terribly ashamed by my misconduct," Fingerhut said in a statement. "I fully accept that what I did was wrong. I apologize to my family and friends."

Fingerhut, 63, admitted he arranged a scheme to dodge banking regulations and amass shares in dozens of banks that were to become publicly traded companies.

The case involves mutual banks, which are owned by customers. When the banks go public and issue stock, depositors get first crack at buying shares.

Fingerhut, a former chairman of the governing council of the Wilderness Society, directed other defendants to open accounts at banks that were likely to go public. The companies later said they would in fact offer stock, and Fingerhut had colleagues buy shares and falsely claim they were for their own accounts. They purchased shares "with Fingerhut's money, for Fingerhut's benefit," prosecutors said.

To expand his scheme, Fingerhut obtained lines of credit in 1999 from the Central Bank of Aspen, later acquired by U.S. Bancorp, prosecutors alleged.

Regulations require mutual banks to offer shares to depositors, limit the amount of stock they can buy and block the transfer of shares to others.

The Aspen resident, once a top executive of investment banking firm Oppenheimer & Co., faces sentencing Sept. 6. He pleaded guilty to a charge that carries a maximum penalty of five years in prison.

Fingerhut, who also resides in Palo Alto, Calif., has strong conservation credentials. He was on the board of the Southern Utah Wilderness Alliance but resigned recently. A bio said he has spent more than 400 nights beneath the rim of the Grand Canyon, mostly backpacking.

Fingerhut should not be judged "solely on this conduct but on the entirety of his character," said his lawyer, Larry Mackey.

Mackey added Fingerhut has stayed active with Aspen Mountain Rescue.

He also resigned from a seat on the National Outdoor Leadership School board.

"It's definitely very sad news," said Bruce Palmer, admissions director of the organization. "He's been a great supporter and a much-appreciated supporter."

Fingerhut also settled a Securities and Exchange Commission case. An SEC official called it "the most extensive bank conversion fraud we have ever seen."

The SEC also named as defendants retired school teacher Robert Danetz, opinion poll researcher and Fingerhut's nephew, Bruce Fingerhut, and real estate attorney Stephen Danetz. They all settled.

patonj@RockyMountainNews.com or 303-954-2544