Florida man who offered to fraudulently buy AMR will face trial

Jan. 05, 2012
Florida man who offered to buy AMR will face trial
Jim Fuquay | McClatchy Newspapers

FORT WORTH, Texas — The Florida man who made surprise offers in March to buy AMR Corp. and Eastman Kodak violated federal anti-fraud statutes and will face trial to determine his penalties, a Florida federal judge ruled last week.

U.S. District Judge Paul Huck found that Allen Weintraub sent the offers on behalf of his Sterling Global Holdings despite "having no significant assets, no funds on hand, no other financing and no professional services engaged to complete the purported offers." Huck also found that Weintraub failed to disclose his past violations of U.S. securities laws, a $1 million unpaid judgment against him and other significant adverse events.

Huck's Dec. 30 ruling comes in response to a lawsuit by the Securities and Exchange Commission against Weintraub, who on March 29 notified AMR, various institutional investors and media outlets that he would pay about $3.25 billion for AMR's outstanding shares. He said he was "a large shareholder" in AMR, the corporate parent of Fort Worth-based American Airlines, and told McClatchy Newspapers at the time that he had bank financing.

He had made a similar $1.3 billion offer for Kodak on March 19. In May, the SEC sued Weintraub, alleging that he made "materially false or misleading statements and omissions" regarding his capabilities and his background. It asked the court to permanently restrain Weintraub from further violations of U.S. securities laws and sought an unspecified civil penalty.

In July, the court awarded the SEC a default judgment after Weintraub failed to appear. According to Huck's ruling, Weintraub never refuted "any of the SEC's factual assertions," refused to answer the SEC's questions and instead invoked his Fifth Amendment right to avoid self-incrimination.