Jailed Market Guru To Defend Himself
NEW YORK (AP) _ The securities fraud case against Martin A. Armstrong took a strange turn this week that has some legal advisers wondering if the New Jersey market forecaster can get a fair trial.
In a closed hearing Monday, U.S. District Judge Richard Owen ruled that Armstrong, who has no formal legal training, will be allowed to represent himself in court against accusations by U.S. regulators that he defrauded Japanese investors out of $1 billion.
But Armstrong is currently locked in a cell in the Metropolitan Correctional Center in New York for contempt of court, his assets have been frozen and he has no money to pay a lawyer to help him in the civil case.
``Given his circumstances, he is in a very difficult position. It is a very complex case and it is going to be very difficult for him to prepare for a trial,″ said Martin Unger, the lawyer who represented Armstrong until this week.
Unger withdrew from the case because of disagreements with Armstrong and because Armstrong couldn’t pay him.
Armstrong, at the same time, wanted to fire Unger. Armstrong, in a telephone interview after the hearing, said Unger did little to get him out of prison, and was afraid of the judge.
Armstrong, who founded Princeton Economics International, allegedly sold $3 billion worth of securities to Japanese companies, pledging to repay them with interest. Instead of putting the money in conservative bonds as promised, he made risky bets on currencies and other investments. Faced with mounting losses, he tried to hide the truth from investors by giving them false account statements, said authorities, who raided his offices last September.
Armstrong repaid $2 billion, but still owes $1 billion.
He is being sued civilly by the Securities and Exchange Commission and the Commodity Futures Trading Commission, and in a separate criminal case by the U.S. attorney’s office.
Armstrong has pleaded innocent and blames executives at Republic Bank (recently acquired by HSBC), where the funds were held.
The U.S. attorney’s office is still investigating the role of Republic Bank and is expected to expand the case with several criminal indictments in the coming weeks.
Armstrong was free on bail until January, when Judge Owen threw him in prison for failing to turn over corporate records and millions of dollars in gold coins, bars and antiques. Armstrong, for his part, said he needed more time to comply with the order.
There is an old adage among lawyers: He who represents himself has a fool for a client. And some attorneys close to the case wonder privately if Armstrong, who often speaks about a government conspiracy, is mentally competent to represent himself.
That would be hard under any circumstances, and on Monday the judge made clear it would be even harder from behind bars.
Owen said Armstrong would have to file a special application, or writ, to get permission to attend proceedings in his own case and that Armstrong would have ``the burden of producing evidence that will convince the District Court that his attendance at a particular deposition is required, that it will contribute significantly to a fair adjudication of his claim,″ according to a copy of the transcript obtained by The Associated Press.
Owen declined to comment on why the media was barred from the hearing.
Under the law, Armstrong can be held in jail for 18 months for contempt of court in a civil case.
``Do I think he’s going to get out? It’s kind of doubtful,″ said Martin Siegel, the court-appointed lawyer for Armstrong’s criminal case, which is proceeding separately.
The judge has maintained that Armstrong can get out of prison anytime he wants by handing over the missing documents and valuables.
Armstrong, however, said in the interview, ``I’m in here to keep me quiet. ... I will never receive a fair trial before Judge Owen. There’s a hidden agenda going on here.″