Investment Broker Wants To Be Released On Electronic Monitoring
February 14, 2002 at 6:57 PM EST - Updated July 3 at 5:00 PM
By JOE MILICIA, Associated Press Writer
CLEVELAND (AP) - A stockbroker accused of defrauding clients used the name of a close friend as an alias while on the run for nearly a month and should remain in federal custody, prosecutors said Thursday.
But defense attorneys told U.S. Magistrate Judge William Baughman that Frank Gruttadauria, 44, should be released to electronic home monitoring, saying he is not a flight risk because he turned himself in and has no resources to flee. They said he had no cash or bank accounts and that his passport had been destroyed by authorities.
Baughman could rule later Thursday, federal authorities said after the detention hearing.
Gruttadauria (pictured, above) is suspected of conducting a 15-year scam while working as a broker for various firms, including SG Cowen Corp. and Lehman Brothers Inc. He disappeared Jan. 11 but surrendered Saturday to the FBI in Cleveland.
Gruttadauria kept false accounts for about 110 customers and reported inflated account values of $277 million, according to an FBI affidavit.
He is charged with making false statements to a financial institution. Authorities said Gruttadauria got a $6 million line of credit in December from National City Bank after he told the bank he had $13 million in assets in a Lehman Brothers account. The account actually had a value of $6.55.
Gruttadauria drew $700,000 from the line of credit on Dec. 21, and $300,000 on Jan. 9, the FBI alleges.
Additional charges were possible, but the time frame was not certain, said Bill Edwards, an assistant to the U.S. attorney for northern Ohio.
Assistant U.S. Attorney Robert Kern said Thursday that Gruttadauria should be held without bond and pointed out that the stockbroker traveled with large amounts of American, British and Swiss money while he was a fugitive.
He said Gruttadauria obtained a false driver's license and rented an apartment in Colorado under the name of his lifelong friend and client Peter Bonutti, an Illinois orthopedic surgeon.
Gruttadauria wasn't capable of living as a fugitive, said his attorney, Roger Synenberg.
"Frank Gruttadauria is a courageous man and because he's a courageous man, we can stand before you today and tell you he does not pose a risk of flight," Synenberg said.
(Copyright 2002 by The Associated Press. All Rights Reserved.)