December 19, 2000
ALBANY, N.Y. A 42-year-old former investment manager awaiting sentencing in a Hawaii case has been indicted on charges of embezzlement and wire fraud for allegedly stealing $314,000 from a labor union's pension fund.
Between 1988 and 1996, Anthony DiPace managed the health and welfare plan for the Laborers International Union of North America Local 190, based in Glenmont in suburban Albany, according to the indictment Friday in Federal District Court.
While managing the fund, DiPace allegedly executed a series of trades through his private brokerage practice called Direction Planning.
DiPace allegedly collected commissions on the trades without the fund's trustees' knowledge, violating federal rules that bar investment managers from acting as brokers in order to avoid potential conflicts of interest.
DiPace allegedly executed the trades as a registered representative of Linsco Private Ledger, a national brokerage firm, even though the company does not allow brokers to have discretionary accounts.
Between 1993 and 1996, he allegedly conducted 41 trades using Local 190 assets, earning him $314,000 in commissions through Linsco, according to the indictment.
Local 190 officials did not return phone calls for comment.
In February, DiPace was convicted of 11 counts of wire fraud in Hawaii for misrepresenting himself to two Honolulu money managers. DiPace is awaiting sentencing.
He faces up to five years in prison on each of 11 counts of mail fraud.
DiPace was convicted of making false statements in March 1996 mailings in an attempt to become investment monitor for the Hotel Union and Hotel Industry of Hawaii Pension Plan.
DiPace failed to get the $300,000-a-year job, in which he would have overseen the companies that invest the pension fund's assets of more than $200 million.
The fund was established by Local 5 of the Hotel Employees and Restaurant Employees Union, the AFL-CIO and certain Hawaii hotels.
Assistant U.S. Attorney Marshall Silverberg said the six trustees of the fund, at the request of Local 5 Secretary Treasurer Anthony Rutledge, agreed to remove Smith Barney as investment monitor and solicit proposals from brokerage houses, including DiPace's firm.
Prosecutors said DiPace claimed to have more Taft-Hartley Fund clients than he actually had and exaggerated their assets.