Business Activities and Conviction For Fraud
In the 1980s, Goldberg was well known on Wall Street, earning the nicknames "Abba Dabba Do" and "Abba Cadabra" for his investment skills.
As Executive Vice President and a major stockholder of Matthews & Wright Inc., a Wall Street investment bank, he orchestrated a massive fraud from 1984 to 1986 in which the firm sold over $2 billion of fraudulent municipal bonds to several cities. The victims were mostly impoverished communities with large minority populations—such as the territory of Guam; East St. Louis, Illinois; East Chicago Heights, Illinois; Chester, Pennsylvania and Sac and Fox Reservation in Oklahoma. Goldberg and his associate, Frederick Mann, netted $11 million in unlawful profits from the scheme.
Among the fraudulent bond issues were $300 million in bonds to finance single-family housing projects in Guam, $223 million in bonds to finance a riverfront housing project in East St. Louis and $335 million in bonds to finance a trash plant in Chester. However, none of the projects were ever built because Matthews & Wright underwrote them with worthless checks.
The Philadelphia Inquirer exposed the scam in a series of articles in 1987. In December 1987, a federal grand jury in Guam indicted Goldberg and Mann on 52 counts of bribery, conspiracy and fraud. Soon afterward, federal authorities were forced to transfer the case to the United States District Court for the Central District of California; so many of Guam's residents had been defrauded that it would have been impossible to empanel a jury. He was indicted on separate charges in Illinois soon afterward.
Facing the prospect of spending the rest of his life in prison, in July 1989 Goldberg pleaded guilty in a Los Angeles federal court to three counts of mail fraud. Later that month, he pleaded guilty in an East St. Louis federal court to one count of conspiracy to defraud. In October 1989, Goldberg was sentenced to 18 months in federal prison and five years' probation. He was also fined $400,000 (later reduced to $100,000 on appeal). In a separate action, the Securities and Exchange Commission banned Goldberg from the securities industry for life and ordered Matthews & Wright to permanently close its doors.
Immediately following his conviction for fraud, Goldberg was suspended from practicing law in New Jersey. He was subsequently disbarred in both New Jersey and Connecticut. Following his conviction, fines, and jail term, Goldberg stopped using his middle name "Abba"; for most of his professional life he had been known as "Arthur Abba Goldberg." Instead, he began calling himself "Arthur A. Goldberg" or simply "Arthur Goldberg."
Read more about this topic: Arthur A. Goldberg
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