Buffalo Lawyer Pleads Guilty To Securities Fraud
Attorney General Spitzer today announced that a prominent attorney has pleaded guilty to felony charges related to his part in an investment scam that cost hundreds of investors in Western New York more than $14 million.
William Gordon, 80, pleaded guilty today before Justice Vincent Doyle in Supreme Court in Erie County to one count of fraud in the sale of securities, a class "E" felony, which is punishable by up to four years in prison.
Gordon co-founded Builders Capital Services in 1994 with David Corbett, a mortgage broker. The two men promoted their company as a conservative, low-risk investment fund making short-term loans to people building homes on their own lots. Gordon banked on his good standing in the community to solicit scores of investors, many of whom were elderly and retired.
In June 1998, Gordon was informed that his partner had diverted $4 million from Builders Capital into risky investments, including housing developments. Gordon failed to notify investors of this diversion, as required by state law. Instead, he solicited new investors while continuing to promote the investments as low risk.
When these investments lost money, Builders Capital began experiencing financial difficulties. The company ceased operating in 2001, leaving debts of more than $14 million to 200 investors. Builders Capital has since filed for bankruptcy.
The Attorney General's Buffalo Regional Office began an investigation of the company in 2001, after receiving complaints from investors.
A sentencing conference is scheduled for January 14, 2003 at 10 a.m.
Gordon's partner, David Corbett, pled guilty in federal court to a felony in connection with his role at Builders Capital Services and is currently serving time in federal prison.
The case is being handled by Assistant Attorneys General James Morrissey and Diane LaVallee of the Attorney General's Buffalo Regional Office and the Criminal Prosecutions Bureau.