Department of Law


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Department of Law Two World Trade Center New York. NY 10047

UepartmenI of Law The State Capitol Albany, NY 12224

For Further Information Contact Timothy Gilles 212/488-3334--518/474-7330

FOR RELEASE:

ABRA/IS TO HOLD H E A R I N G S

Attorney

General

SUNDAY, J A N U A R Y 24, 1982 A F T E R 12:00 N O O N

ON ILLEGAL B O I L E R R O O H

Robert Abrams announced

today

w i l l hold public h e a r i n g s

in N e w York City on M a r c h

described

fastest

growing

General Abrams

stated:

as "the state's

SCHEMES

(Sunday)

4 and

investment

that he

5 on w h a t he

fraud,"

the o p e r a t i o n

of illegal b o i l e r rooms. Attorney

"During the p a s t illegal o p e r a t i o n s that the simply,

six months,

and a r r e s t e d

laws r e g a r d i n g

these

my office has c l o s e d

some 50 individuals.

However,

frauds are in urgent need

for con a r t i s t s of this kind,

down 6 of these

of

the risk of b e i n g

it is clear

reform.

caught

Quite.

is minimal

and the risk of going to jail even m o r e remote." Attributing inflation

the t r e m e n d o u s

and the v o l a t i l e

the t y p i c a l b o i l e r

over the t e l e p h o n e

precious

and s t r a t e g i c metals,

commodity being offered Each year,

of dollars

is g r o s s l y m i s r e p r e s e n t e d ,

in p r o s e c u t i n g

salespersons

invariably

representations which o t h e r hand, personnel,

investors

to u n s c r u p u l o u s boiler

Mr. A b r a m s m a i n t a i n e d obstacles

their e m p l o y e r s

Typically,

the

frequently

the

country

law t h e r e

For example,

lose

that

room c l a i m that

made u n a u t h o r i z e d

are major

b o i l e r room the

told them to m a k e w e r e

of the b o i l e r

in

room o p e r a t o r s .

c l a i m that they were u n a w a r e

to them,

investments

and

across

that under c u r r e n t

these offenders.

the p r o m o t e r s unbeknownst

to a t t r a c t

e x p l a i n e d that

uses high

oil and other c o m m o d i t i e s .

unsuspecting

fraud to

Mr. A b r a m s

room is a f l y - b y - n i g h t o p e r a t i o n w h i c h

sales t a c t i c s

millions

in i n v e s t m e n t

state of the economy,

pressure

worthless.

upsurge

their

false.

On the

sales

representations

to

customers. In addition, statute

Mr. A b r a m s

said that the p e n a l t i e s

are not stiff e n o u g h to p r o v i d e

in the current

a meaningful-deterrent.

(over) '

-2To

package

address

these problems,

the A t t o r n e y G e n e r a l

of bills w h i c h w i l l be p r e s e n t e d

including proposals --Make

p e r s o n calling exchange.

for p u b l i c c o m m e n t

a

at the h e a r i n g ,

to:

it illegal

u n s o l i c i t e d calls

has p r e p a r e d

in the

to use m o r e

than two t e l e p h o n e s

sale of s e c u r i t i e s or c o m m o d i t i e s

is a s s o c i a t e d w i t h a r e c o g n i z e d trade

Violating

this

to m a k e unless

association

law w o u l d be a felony p u n i s h a b l e

the or

by a m a x i m u m of

seven years in prison. --Make fraud

r e p e a t e d or i n t e n t i o n a l v i o l a t i o n

law a felony.

state

investment

It is now a m i s d e m e a n o r .

--Increase

the p e n a l t [

m a x i m u m of four years

for o p e r a t i n g

a scheme

to d e f r a u d

from a

in prison to seven y e a r s .

- - A l l o w the p r o s e c u t i o n of d e f e n d a n t s were

of the

e n g a g e d in a common

scheme,

even

in j o i n t

if they were

not

trials when

indicted

they

for the

same offense. The h e a r i n g s w i l l be held at Two W o r l d T r a d e C e n t e r convene

at 10 a.m.

on b o t h M a r c h 4 and 5.

Among the

are former v i c t i m s of b o i l e r r o o m o p e r a t i o n s schemes, their

federal

scheduled witnesses

and p a r t i c i p a n t s

i n c l u d i n g u n d e r c o v e r o p e r a t i v e s who w i l l be d i s g u i s e d

identities.

Officials

regulators

of stock and c o m m o d i t y e x c h a n g e s

and p r o s e c u t o r s

Attorney

G e n e r a l Abrams

invites

for an appearance.

from the A t t o r n e y G e n e r a l ' s ~ u u r e a u W o r l d T r a d e Center,

in the to protect and state and

are also e x p e c t e d to testify. i n t e r e s t e d p a r t i e s who w i s h to

c o m m e n t on the p r o b l e m and on his l e g i s l a t i v e p r o p o s a l s o f f i c e to a r r a n g e

and w i l l

to c o n t a c t his

F u r t h e r i n f o r m a t i o n may be obtained

of I n v e s t o r P r o t e c t i o n

New York, New Y o r k

-30-

10047,

(212)

a~d Securi%z,~Two

488-7563.