Word: cornfeld
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Dates: during 1970-1979
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AFTER Founder Bernard Cornfeld finished manipulating and misusing the Geneva-based IOS mutual fund complex in 1970, it was a wonder that there were any assets left to drain off. In fact, enough cash and American stocks remained in IOS-managed funds to provide the makings of an international scandal juicier than any that Cornfeld produced. Last week the Securities and Exchange Commission accused Cornfeld's successor, Robert L. Vesco, and a group of Vesco's associates of "looting" no less than $224 million from four IOS funds so far this year. The SEC brought a civil action...
...Vesco first set out to cement his control by buying out Cornfeld, who had been deposed as chairman but still held a large block of IOS stock. In early 1971, Vesco secretly bought the block for $5.5 million-$3,500,000 more than the market price-through a dummy Panamanian corporation called Linkink. Later, Vesco had International Controls buy Linkink. The SEC complaint states that Vesco chose this circuitous route because he wanted to hide his operations as thoroughly as possible. If the charge is true, Vesco bought Cornfeld's stock at an inflated price by using stock...
...Having got rid of Cornfeld,* Vesco and associates zeroed in on the securities held by four IOS-managed mutual funds: Venture Fund, Fund of Funds, International Investment Trust (IIT) and Transglobal Growth Fund. Between April and October of this year, the SEC says, Vesco and friends sold out of the funds' holdings nearly a quarter of a billion dollars worth of stocks, including Chase Manhattan, General Motors, Mobil Oil, A T & T and IBM, and used the cash to further "their personal interests and pursuits...
...international law that a country can halt activity occurring outside its borders if it "causes an effect" within those borders. If the SEC can make that claim stick, the offshore funds' freedom from supervision may be over-too late to help IOS-fund shareholders who have suffered the Cornfeld and Vesco regimes. In early 1970, IOS-managed funds had almost a million shareholders and assets of $2.3 billion; now the count is down to about 300,000 shareholders and assets of roughly $630 million-including the $224 million that Vesco allegedly made off with. But closer regulation of offshore...
...Norman Leblanc, a Canadian accountant, but even he cannot work full time in the Geneva corporate offices because the Swiss have not granted him a labor permit. Leblanc is forced to operate from Ferney-Voltaire, a French village that became a minimetropolis almost overnight in 1967, when Cornfeld erected a complex of buildings to house I.O.S.'s administrative operations...