Magazine article American Banker

Former Parr Securities Chief Gets 3-Year Sentence

Magazine article American Banker

Former Parr Securities Chief Gets 3-Year Sentence

Article excerpt

NEW YORK -- Gregory Herbert, former president and owner of the Parr Securities Corp., a government securities dealer that collapsed in 1985, has been sentenced to three years in prison for engineering a $22 million series of frauds involving lending institutions, school districts, and municipalities.

In imposing the sentence last Thursday, U.S. District Court Judge Leonard B. Sand said the magnitude of the crime was "mind-boggling."

Judge Sand noted that he would have imposed a much stiffer sentence, closer to the maximum 15 years, except for Mr. Herbert's previous "exemplary" record and the fact that he came forward to confess his crimes.

Mr. Herbert, 39, pleaded guilty in November to charges that he had engaged in a succession of fraudulent transactions from September 1983 until May 1985 to pay off huge trading losses incurred by Parr and to repay the earliest of the frauds.

According to court documents, Mr. Herbert in late 1983 began engaging in repurchase agreements, often known as repos, with a number of New York State school districts and municipalities without ever owning the government securities involved in the transactions.

In a repurchase agreement one party sells a government security to another party on the condition that the seller agree to repurchase the security, or an equivalent one, at a later time for a higher price.

Mr. Herbert concealed the frauds and his large trading losses from Parr's auditors by falsifying company records and destroying some incriminating documents. …

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