FLORIDA — AGAIN: Parolee, Larcenist And Recidivist Huckster Charged In New Fraud Caper; Allen E. Weintraub Made Bogus Takeover Bids For Kodak And AMR — And Caused AMR’s Trading Volume To Mushroom Sixfold, SEC Says

Allen E. Weintraub of Aventura, Fla.

Is it the oddest fraud story coming out of Florida to date?

A man who emailed Eastman Kodak and AMR in March with offers to purchase the famous companies for billions of dollars had declared bankruptcy in 2007, was on probation for grand theft when the offers were made and extended the offers through a shell company the state of Florida dissolved last year for not filing its first annual report, the SEC said.

On March 19, a Saturday, Allen E. Weintraub emailed  Kodak with a “tender offer” to purchase the firm for $1.3 billion in an all-cash deal through Sterling Global Holdings, his dissolved shell company. Ten days later, with his purported Kodak deal percolating, Weintraub emailed AMR, the parent company of American Airlines, and offered to plunk down about $3.25 billion in cash to acquire the company, the SEC said.

Sterling Global “conducts no business and has no assets,” the SEC said. Regardless, Weintraub allegedly offered a premium nearly 50 percent above the prices of each of the firms’ stock.

In a securities-fraud complaint that reads like an impossible work of fiction, the SEC alleged that Weintraub had been convicted three times in criminal fraud and grand larceny cases between 1992 and 2008. In 2003, he was ordered by a federal judge not to act as an officer and director of a public company after the SEC accused him of breaking securities laws, not disclosing his criminal past in filings and “dumping” shares. The agency obtained a judgment of $1.050 million against Weintraub in the case, which was filed in 2002.

Weintraub was arrested for selling bogus hurricane insurance in Florida in 2005, according to records.

Weintraub had paid only $220 on the SEC judgment, according to records. He was on probation for 10 years at the time the Kodak and AMR offers were made, the SEC said.

Although Weintraub claimed to have financial backing to take over the companies, the SEC said its investigation revealed that he made visits to at least three “branch offices” of large commercial banks in his neighborhood, but emerged with no money.

Why Weintraub allegedly discussed financing for major corporate takeovers through branch offices that cater to commuters instead of dealing directly with investment-banking units was unclear. Also unclear is why Weintraub claimed to have secured financing when no lenders signed onto a deal with Weintraub, a recent bankrupt who had an unpaid judgment of more than $1 million from the SEC case and also had been the subject of a 2006 foreclosure action in Florida involving a $1 million promissory note on a property at Golden Beach in Miami-Dade County.

What is clear is that Weintraub created a sideshow involving both firms by embarking on a media campaign after announcing his takeover bids, according to the SEC.

“In an effort to generate publicity, Weintraub emailed the purported tender offers to media outlets and financial investment research firms,” the SEC said. “In published media interviews, Weintraub boasted that he has 15 years[‘] experience buying distressed companies, that banks had agreed to finance the acquisitions, and that letters of credit could be readily provided.”

And Weintraub pumped up the offers by creating the appearance that he was at the helm of a global enterprise, rather than a dissolved Florida company formed in October 2009 that did not even file its first required annual report the following year.

Indeed, the SEC said, Sterling’s Global’s “letterhead listed the cities Atlanta, Cleveland, Denver, Dubai, London, Los Angeles, Miami, New York, and Tel Aviv, creating a false impression that Sterling Global had offices in each of those cities.”

The address used in the tender offers was a “nothing more than a mail drop” in Davie, Fla., the SEC said.

As news about the AMR offer appeared, the trading volume of the stock jumped more than sixfold, the SEC said.

“The trading volume in AMR’s stock rose from approximately 5 million shares on March 29 to approximately 31.5 million shares on March 30,” the SEC said. “The lack of any other AMR or airline industry news indicates that the March 30 price and volume movement were affected by the media coverage of Sterling Global’s AMR tender offer that occurred in the late afternoon of March 29.”

Weintraub has been charged with securities fraud and violations of the tender offer rule.

“Neither Weintraub nor Sterling Global has the means to purchase either Kodak or AMR by tender offer or otherwise as they have no substantial assets or resources,” the SEC said.

Read the SEC complaint.