Judge Denies Bond For Investment Broker - Cleveland 19 News Cleveland, OH

Judge Denies Bond For Investment Broker

By JOE MILICIA, Associated Press Writer

CLEVELAND (AP) - A judge cited a flight risk in denying bond Friday for a stockbroker who fled town for a month after notifying authorities that he defrauded clients.

Prosecutors had argued that Frank Gruttadauria (pictured, right) should remain in federal custody to prevent him from fleeing a second time. But defense attorneys told U.S. Magistrate Judge William Baughman that Gruttadauria, 44, should be released to electronic home monitoring. They said he had no cash or bank accounts and that he destroyed his passport before he secretly fled Cleveland on Jan. 11.

The judge wrote in his motion that Gruttadauria has the motivation, resources and expertise to flee and knows how to function as a fugitive.

"Gruttadauria faces serious federal criminal charges and has admitted to significant wrongdoing. He has little hope of avoiding serious consequences from that wrongdoing," the order says.

Baughman also said the $1 million Gruttadauria borrowed from National City Bank is unaccounted for.

Gruttadauria kept false records for about 100 accounts of 25 families and reported inflated account values of $277 million, according to an FBI affidavit.

Gruttadauria 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 are possible, 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 when he was considered missing.

Gruttadauria 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 surrendered Saturday to the FBI in Cleveland.

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 orthopedic surgeon.

Bonutti, of Effingham, Ill., has known the broker since high school, said his lawyer, Robert Carson. Bonutti had been Gruttadauria's client since 1991.

"He's lost in the millions," Carson said about Bonutti. "He's really been devastated, financially and personally."

Gruttadauria realized he wasn't capable of living on the run, said his attorney, Roger Synenberg.

Before turning himself in to the FBI, Gruttadauria had to see his children, Synenberg said. So for two days, he watched his children from the woods on his estranged wife's property in the upscale Cleveland suburb Gates Mills. They never knew he was there.

(Copyright 2002 by The Associated Press. All Rights Reserved.)

Powered by Frankly