CONCORD — A Jaffrey couple charged with trading securities without a license has agreed to pay $600,000 to victims and the state. The two are barred from working in the securities industry in New Hampshire for life, and will receive prison sentences under the terms of a settlement announced by Attorney General Joseph Foster on Thursday.
Charles H. Howard III spent more than three years in prison in the 1990s after he was convicted of fraud and illegal trading. Federal prosecutors said at the time he contributed to the New England banking collapse in the late 1980s that resulted in federal officials taking over and closing three of the state’s five biggest banks.
According to Assistant Attorney General Robert Adams, the state’s most recent investigation revealed that from at least 2002 through early 2009, Charles and Carolyn Howard operated as unlicensed investment advisers and broker dealers. In some instances, according to Adams, Howard was authorized to use the investors’ user names and passwords to actively trade through the investors’ online brokerage accounts.
State officials allege Howard was using those accounts to manipulate the market price of Video Display Corp. (VIDE) stock through coordinated end-of-day trading designed to artificially inflate the reported price of the stock. Howard’s wife Carolyn, a director and major shareholder of VIDE, substantially benefited, as did Howard’s investment advisory clients and other substantial holders of VIDE shares.
“Through our investigation, the Bureau determined that these investors were unaware that Mr. Howard was prohibited from engaging in this activity due to his previous criminal convictions and that he was being paid by the very same companies in which the victims invested,” Eric Forcier, staff attorney for the Securities Bureau, said in a statement.
Carolyn C. Howard, and the couple’s company, Howard Interests, have been ordered to permanently cease and desist from violating state securities laws. Carolyn Howard has also agreed to resign from her position as a director for two publicly traded companies, VIDE and MDU Communications International Inc.
Howard has agreed to a seven- to 20-year sentence, serving 3 1/2 years in state prison with the balance of his seven-year minimum served on electronically monitored home confinement. His term can be reduced by an additional six months if Howard cooperates with the state’s ongoing investigation.
Carolyn Howard was sentenced to 12 months in the House of Corrections, deferred for one year on condition that she cooperate with the state’s investigation.
Jeffrey Spill, deputy director of the state’s Bureau of Securities Regulation, said Charles Howard pleaded guilty to one felony count of conspiracy to commit investment adviser fraud and one felony count of securities manipulation. Carolyn Howard pleaded guilty to one misdemeanor count of being an unlicensed investment adviser.
King of Bank Stocks
Howard was known as the “King of Bank Stocks” in New England during the 1980s when many private banks went public. The former Bedford resident had a $4 million mansion and luxury cars. He threw a birthday party for his wife in Paris paid for with commissions for trading bank stock among banks and their office holders.
Howard, an adviser to the defunct Amoskeag Bank of Manchester and other banks, manipulated the price of the stock with buying sprees that fueled price increases, according to securities officials. When the price went up, Howard sold his holdings, turning short-term profits in the millions.
His legal troubles began when federal officials opened an investigation into allegations of insider trading related to the merger of Coastal Savings Bank in Portland, Maine, with Suffield Savings Bank of Suffield, Conn. Howard eventually pleaded guilty to conspiracy to obstruct a federal grand jury investigation; he served eight months of a five-year sentence. He was later charged with bank fraud and offering kickbacks to Amoskeag banking official David Towner and was sentenced to another five years in prison.
He served about 30 months before his release in 1996.
Charles Howard’s sentencing will be set at a later date, to give him a chance to participate in the state’s investigation before being incarcerated, officials said.