Benihana restaurant founder Rocky Aoki was indicted by a federal
grand jury yesterday on charges he cooked up an insider trading scheme
that netted him $590,000.
Aoki, 59, resigned last month as chairman and chief executive of
Benihana, a 61-restaurant Japanese steakhouse chain based in Miami after
being informed he was the subject of a federal securities
investigation.
According to federal prosecutors, Aoki bought 200,000 shares of
Spectrum Information Technologies in September and October 1993 after
learning that the company was about to hire then Apple Computer chairman
John Sculley.
The colorful Aoki a former Olympic wrester and successful balloonist
paid between $4.
90 and $6.
60 per share.
He then sold his stock for $11 a share, earning a profit of $590,000,
after Sculley's appointment was announced soon after.
The stock rose 46% the day of the announcement.
Prosecutors said Aoki was tipped off about Sculley's negotations with
Spectrum from public relations consultant Donald Kessler.
Kessler, who was later paid $10,000 by Aoki, pleaded guilty last
December to participating in an insider trading scheme and is
cooperating with the government.
Kessler's guilty plea last Dec. 30 was part of a larger case of
securities fraud and tax evasion.
In the case, Kessler is described as a "self-employed stock promoter
who earned fees from companies primarily by arranging for them to be
mentioned publicly and in print by a prominent business journalist.
"
While the journalist was not identified in the indictment,
BusinessWeek had previously identified him as Dan Dorfman, a long-time
business columnist who made daily appearances on CNBC and wrote for
Money Magazine and USA Today. Citing health problems, Dorfman left CNBC.
Money fired him.
The restaurateur will be arraigned tomorrow. Indicted on one count of
conspiracy and six counts of insider trading, he faces up to five years
in prison and $250,000 in fines on each count.
"This indictment," said U.
S. Attorney Zachary Carter,
"demonstrates this office's zero tolerance for violations of the
securities laws and its commitment to protecting the investing public.
"
Aoki's attorney, Martin Auerbach, said his client intends to plead not guilty and "respond to the charges in court.
"
Aoki has long led a flamboyant life.
In 1981, he was part of a crew that became the first to fly a gas balloon across the Pacific Ocean.
Aoki is currently said to be working with Drezel Aqua Technologies to salvage a ship that sank off Ocean City, N.
J., in 1901.
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