New York Union Fund Manager Indicted for $314,000 Theft

Anthony DiPace, a union investment manager, was indicted Dec. 18 on embezzlement and wire fraud charges for allegedly stealing $314,000 from a union’s pension fund by concealing commissions he made on dozens of stock and bond trades. From 1988 to 1996, DiPace managed the health and welfare plan for the Laborers Int’l Union of N. Am. Local 190 in Glenmont, N.Y.

While managing the fund, DiPace allegedly executed a series of trades through his private brokerage practice, Direction Planning. DiPace allegedly collected commissions on the trades without the fund’s trustees’ knowledge, violating federal rules that bar investment managers from acting as brokers in order to avoid potential conflicts of interest. The trustees paid DiPace to manage the fund based on a formula they had established.

DiPace allegedly executed the trades as a registered representative of Linsco Private Ledger, a brokerage firm, even though the company does not allow brokers to have discretionary accounts. Between 1993 and 1996, he allegedly conducted 41 trades using Local 190 assets, earning him $314,000 in commissions through Linsco.  In 1996, federal authorities monitored 10 phone calls DiPace made to a Linsco bond trader in San Diego. The transactions that took place over those phone conversations are included in the indictment.

In February, DiPace was convicted of 11 counts of wire fraud in Hawaii for misrepresenting himself to two Honolulu money managers. DiPace claimed he had more clients than he actually had and lied about how much money he had under his management, according to federal prosecutors. DiPace is awaiting sentencing. [Times Union (Albany) 12/19/00]