By THOMAS J. SHEERAN, Associated Press Writer
CLEVELAND (AP) - A broker facing up to eight years in prison in a $268 million investment scam should be sentenced harshly as a warning to others, investment club leaders said Wednesday.
U.S. District Court Judge John Manos has some leeway to deviate from the 6½- to eight-year sentence in the plea bargain struck by Frank Gruttadauria, 44, of suburban Gates Mills. He will be sentenced Thursday.
Suzette Cohen, 59, of Mayfield Heights, a remedial reading teacher active in two investment clubs, said the longer the sentence, the better. "My vote would be for very harsh sentences," she said.
Cohen said the fraud should alert investors to check their mailed account statements against online information. Gruttadauria (pictured, above) admitted diverting client mail statements and forwarding falsified information.
"He's part of this economic downturn with people not trusting the investment community," Cohen said.
William Cook, 74, of Cleveland Heights, a semiretired materials scientist and member of four investment clubs, agreed that Gruttadauria's case shows investors must be wary.
"Know the firm you're dealing with," said Cook, who uses one brokerage for investment advice and a second to arrange stock sales and purchases. Like Cohen, he serves as a chapter director of the National Association of Investors Corp. representing 30,000 investment clubs.
Gruttadauria pleaded guilty in August to securities, wire and bank frauds, as well as identity theft.
He admitted making more than $54 million in unauthorized transfers from client accounts during the five biggest years of a scheme that began almost 16 years ago.
The scam ended when Gruttadauria disappeared in January, leaving behind a confession. He surrendered to the FBI nearly a month later.
Assistant U.S. Attorney Robert Kern said Gruttadauria deserved the maximum sentence because some clients were forced to sell homes.
Defense lawyers Roger and Joan Synenberg said Gruttadauria deserved leniency.
They filed a 30-page document on Monday, stating that he told the FBI about his thefts before anyone knew about them, that he left digital tapes behind to lead investigators through the crime and that the thefts involved only about 10 percent of his 470 clients.
More than 30 people, including some victims, wrote to the judge asking him to be lenient.
Some victims have sued Gruttadauria's former employers for allegedly lax supervision and want his help building a case against the firms.
David Roche, 54, an investment club member and computer consultant from suburban Richmond Heights, said it was understandable that the victims would endorse leniency for Gruttadauria while seeking his help.
"The brokerage houses should have had more control of their safety precautions in place," he said.