Bull in the Market

South Florida philanthropist Richard Bronson built his fortune on the shady side of Wall Street

Then in March 1987, a month before his 33rd birthday, Bronson acquired a broker's license, according to the SEC. From 1987 to 1990 he worked at some of the nation's premier brokerages, including Bear, Stearns & Company and Shearson, Lehman, Hutton. No investors complained about him during those years, according to records of the NASD, which regulates the industry.

In August 1990 Bronson joined a small securities firm in Lake Success, New York, called Stratton Oakmont, which regulators would later term among the most corrupt brokerages in the nation. It was a place where a trader could make a lot of money. Investors first complained about Bronson during his tenure at Stratton. In 1991 one person accused him of unauthorized and unsuitable trading, according to NASD records. He agreed to pay $50,000 but admitted no wrongdoing; such an admission would have jeopardized his dealer's license. A second investor complained that Bronson was culpable of "misrepresentation of fact" while selling securities. He settled that one, too, paying $12,000 without admitting guilt.

At Stratton Oakmont, paying such penalties was apparently part of the cost of business. In a field where enforcement is generally weak and slow, the government reacted with rare severity. Citing Stratton's egregious violations of SEC rules, the feds closed the firm in 1996. The government alleged stock fraud and market manipulation dating to the early Nineties. But long before regulators shuttered Stratton, Bronson had migrated to South Florida "because he needed a change," according to Lizzie Grubman, a New York City publicist handling questions for Bronson. He arrived here in 1992.

It was a logical choice. South Florida is fertile ground for the affluent and socially ambitious. The region has a habit of embracing movers and shakers, no questions asked. It has a culture of possibility and big dreams that has allowed some high rollers to dupe the gullible. Take Leonel Martinez, a once-prominent developer who threw money around like Johnny Appleseed. In the Eighties Miami named a street after him, the Leomar Parkway. The sign came down after his conviction for drug dealing in 1990. And there's Abel Holtz, a generous, civic-minded banker who gave freely and who inspired Abel Holtz Boulevard. It turns out Holtz gave too freely. He pleaded guilty in 1995 to lying to a grand jury about paying bribes to former Miami Beach Mayor Alex Daoud. A street still bears his name. Then there's the former chairman of the now-defunct CenTrust bank, David Paul, sentenced to an eleven-year prison term for bank fraud in 1993. Paul attended high-society functions, sat on the board of the New World Symphony, and loved to show off his art; his collection included a $13 million work by the Flemish painter Peter Paul Rubens hanging in his office.

Loewenstern, a Stratton broker then 30 years old, joined Bronson in South Florida in 1992. The pair bought Biltmore Securities, Inc., a small three-year-old brokerage house in Fort Lauderdale, for $200,000, according to Nortman. In a year the number of brokers more than tripled to 70 and revenues jumped from $2.9 million to $10.6 million, according to a 1993 Forbes magazine article. After the sale to Bronson and Loewenstern, regulators tracking the spread of investor fraud took to calling Biltmore "the son of Stratton," says Alabama's Securities Commissioner Joe Borg. In fact, the pair attracted several Stratton clients. Biltmore also helped sell stock for Stratton. "It's no secret that Elliot Loewenstern knew one of the [Stratton] principals from his youth on Long Island," Nortman says. "They categorically deny there is any surreptitious activity between the companies. Whatever transactions they did were pursuant to the rules and regulations of the industry." Calls to Loewenstern were returned by Nortman.

Another interesting thing happened when Bronson and Loewenstern took over Biltmore. Complaints about the company's trading practices started coming in to the Miami office of the SEC. Until then Biltmore had a clean record, according to NASD records.

Though Biltmore had a dubious reputation among some regulators and clients, employees prospered -- if they could hack it. The company threw $30,000 Christmas parties and even provided a Lear jet for the top twelve earners to travel to the Caribbean, says Scott Link, a West Palm Beach lawyer who represented several clients in lawsuits against Biltmore. But the psychic toll of this guerrilla outpost of capitalism was high, Link observes: "Based on my interviews, I'd say it was a culture of public humiliation and military-type brainwashing."

(Link wouldn't give details of his clients' past conflicts with Biltmore because of confidentiality agreements. He did describe a new action filed in June on behalf of a retired New York City school principal who claims to have lost $128,000. The client alleges Biltmore traders sold him stock and then refused his directions to sell. The case is pending before the NASD, he says.)

"It doesn't sound like they're accusing him of a crime. It sounds like someone who runs a business wants his people to be more productive," counters Nortman.

Biltmore's alleged tactics are described in the SEC's 1993 suit: Bronson and Loewenstern would hire inexperienced young men to cold-call potential clients. The pair would put new recruits through a kind of boot camp, referring to investors as "degenerate gamblers" and "piker pieces of shit" (people who would not invest large sums) or "whales" (people who would).

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