Related topics

Ex-Banker Pleads Guilty

September 15, 1998

NEW YORK (AP) _ A former Smith Barney investment banker who gained fame for disclosing alleged abuses by Wall Street firms in the municipal bond market pleaded guilty Tuesday to using prank e-mail messages to harass his old bosses.

Michael Lissack, 40, avoided jail in pleading guilty to second-degree harassment, a violation and lesser offense than the misdemeanor harassment charge with which he was originally charged. The misdemeanor is punishable by a year in jail.

The former director in the municipal-bond department at the firm, now known as Salomon Smith Barney Inc., encouraged Internet users to send his former bosses annoying cards and gifts as well as e-mail messages about sex and abortion.

In sparing Lissack from jail, Manhattan Criminal Court Judge Gabriel Gorenstein ordered him to stay away from the executives who were targets of the harassment, including Sanford I. Weill, the chairman Travelers Group Inc., Salomon Smith Barney’s parent. If he doesn’t, he could be jailed for 15 days.

Lissack began the harassment campaign months after he was fired by Smith Barney in February 1995. He posted six e-mail messages on the Internet between Sept. 1, 1996, and Jan. 11, 1998, using his former bosses’ names, addresses and telephone numbers.

One e-mail supposedly from James Boshart, a vice chairman of what is now Salomon Smith Barney, solicited sympathy cards from recipients for what turned out to be a nonexistent 6-year-old boy named Jim, who had terminal liver cancer.

``Little Jim would love whatever cards you could send in the few months he has left,″ the court complaint quoted the e-mail. Boshart said he was flooded with mail and gifts from strangers and public officials because of the crank message.

``We are hopeful that Mr. Lissack’s guilty plea together with the protective order issued by the Criminal Court judge will prevent him from further harassing Salomon Smith Barney employees,″ said Arda Nazerian, a spokeswoman for the firm.

Lissack said he began the harassment campaign because ``in 1995 Smith Barney was harassing me, trying to get me to retract statements I had made. I reacted in an emotional manner and I made some mistakes.″

The guilty plea is the latest twist in a prolonged feud between Smith Barney and Lissack over his whistle-blowing allegations of abuses by the firm and other participants in the $1.3 trillion municipal bond business.

Lissack was fired after he began making accusations about ``yield-burning″ abuses and other improprieties by muni-bond dealers to fatten their profits.

Yield-burning occurs when underwriters slap excessive markups or fees on Treasury securities used to complete complex muni-bond issues. It’s a form of price gouging that gives the firms a windfall while feigning compliance with federal tax rules.

The Justice Department, the Securities and Exchange Commission and the Internal Revenue Service have been investigating yield-burning allegations since at least 1995. Lissack also is believed to have filed whistle-blower lawsuits involving yield burning against Smith Barney and other Wall Street firms.

Update hourly