A Famous Fraudster Pays the Price, or Not

He once counted buyout heavyweights like Henry Kravis and David Bonderman among his peers. Kohlberg Kravis Roberts reportedly paid him handsomely for his counsel. He even made headlines with unsolicited bids for Sony Corp., Playboy Enterprises, and a company founded by former President George H.W. Bush.

In the end, though, he was nothing but a fraud, federal officials said after winning $1.8 million in judgments against the man and his company.

Whether the Securities and Exchange Commission will ever see any of the money is unlikely. The judgments were entered by default because the defendant, Theodore Roxford (a.k.a. Lawrence David Niren), has left the country. And he has made it plain that he doesn't ever plan to pay.

The S.E.C. says that Roxford and his company, Hollingsworth, Rothwell & Roxford, made "false and materially misleading statements" when it offered to buy five publicly traded companies. The commission says that neither Roxford nor his company planned to actually buy anything: They wanted to sell.

What did they want to sell? The stock they owned in each of the targeted companies: Sony, Playboy, Edgetech Services, PeopleSupport, and the company founded by the first President Bush, Zapata Corp.

"They made these fake offers in order to manipulate the price of the target companies' stock by inducing investors to purchase the stock," the S.E.C. said.

District Judge P. Kevin Castel in New York evidently agreed. After Roxford failed to appear for any court hearings, the judge ordered Hollingsworth, Rothwell & Roxford on March 3 to pay $900,000 in civil penalties. Four days later, for good measure, he ordered Roxford to pay another $900,000 himself.

Case closed? Not quite. Roxford, a Canadian, apparently has relocated to Buenos Aires, where he is happily thumbing his nose at U.S. authorities.

In an email message to the Globe and Mail in Toronto, Roxford — or someone pretending to be him — dismissed the entire matter as "silly."

"The S.E.C. never proved their [sic] case," the newspaper quoted Roxford as writing. "We just lost interest in it and let it default."

The message added that his company "has not been in existence, and has not had any assets, since 2003."

Is he worried about losing the case? Not a bit.

"I'm too busy right now to even think about the silly S.E.C. stuff," according to the email.

by Mark Stein