When the Securities and Exchange Commission launched a probe of John Giura in 1983, other partners at Stein Roe & Farnham readily gave him the benefit of the doubt.
After all, Giura, a native of Italy, had worked his way up from a low-level administrator speaking halting English to the third-ranking partner at Stein Roe, a respected Chicago investment advisory firm. As the firm`s specialist on union pension funds, he headed a team of portfolio managers that controlled some $1 billion in clients` investments.
The Oak Park resident could also reel off a string of civic accomplishments, including being named outstanding new citizen of the year for metropolitan Chicago in 1966. An active churchgoer and friend of a high religious leader, Giura had served on local zoning and high school boards and was a long-time director of St. Paul Federal Bank for Savings, the No. 3 savings and loan association in Illinois.
In short, ”His public reputation was impeccable,” said a business associate.
But Giura`s life took a bizarre turn last June, after he stepped off an elevator and was arrested and handcuffed by two FBI agents in the lobby of a federal office building in lower Manhattan.
Giura was charged with trying to block the two-year-long SEC probe into his activities. He allegedly coached the agency`s key witness, a Florida stockbroker, to lie to investigators and lied himself.
Asked by the broker why he shouldn`t tell the truth, Giura allegedly responded in a tape-recorded conversation cited in court documents: ”You do that and it`s my life. My life is over with if you don`t do what I ask.”
After flying back to Chicago, he resigned the next day at Stein Roe`s request. A month later, Giura was indicted by a federal grand jury, and he later pleaded not guilty to the charges of perjury and obstructing the SEC investigation. He also argued that he was trapped into committing perjury.
The charges against Giura have sent shock waves through Chicago`s business community and rattled two of the city`s venerable financial institutions, Stein Roe and St. Paul Federal. Both have denied any knowledge of Giura`s alleged illegal activities.
”Half the world was stunned that this could happen to John,” said Louis Holland, a partner in the Chicago investment management firm of Hahn, Holland & Grossman.
According to court documents, the continuing SEC investigation and a grand jury probe are focusing on whether the former Stein Roe partner paid kickbacks and committed other illegal acts, apparently in an effort to win or retain the accounts of Teamsters union pension and health-benefit funds in New York state.
Giura served as one of the investment advisers to the funds, which have combined assets of more than $500 million. Said one investigator: ”He had a vested interest in keeping these accounts. There were hundreds of thousands of dollars to be made in advisory fees.”
The SEC and grand jury are specifically investigating whether Giura convinced the Florida broker, John Sbertoli, and two other brokers in Chicago to make questionable payments between 1978 and 1983 to two individuals connected with Teamsters funds, according to court papers.
Two weeks after Giura`s arrest, St. Paul Federal shut down Sbertoli`s discount stock-brokerage firm in Marco Island, Fla., and accepted Sbertoli`s resignation. The thrift had purchased the brokerage firm, called StockService Corp., on Giura`s recommendation in the fall of 1984, after the alleged payoffs occurred.
Another part of the probe, and the subject of a separate investigation by the U.S. Labor Department, concerns Giura`s alleged payment of kickbacks to relatives and associates of Teamsters officials in the form of hard-to-get new issues of stock. Investigators familiar with kickbacks involving cash and yachts regard new stock issues as an unusually sophisticated form of payment. At the heart of the SEC and grand jury probes are alleged links between Giura and various people connected with the New York Teamsters funds, court documents have disclosed.
Among those whose alleged ties to Giura are being scrutinized are Rocco De Perno Sr., a trustee of an upstate New York Teamsters pension fund, and Anthony Bentro, described by federal prosecutors in 1978 as ”a very wealthy businessman” associated with members of organized crime. Bentro was convicted along with former New Jersey Teamsters boss Anthony Provenzano of conspiring to pay kickbacks to De Perno, although Bentro`s conviction was overturned on a technicality.
According to court papers, the SEC is also investigating allegedly improper Teamsters-related activities involving Giura and the branch manager and two former brokers in Shearson Lehman Brothers Inc.`s Utica, N.Y., office. Giura didn`t respond to requests for an interview. But, in private conversations with friends, he reportedly claims to have been ”set up” by Sbertoli and mistakenly snagged in a wide-ranging federal probe of Teamsters activities. ”There were no improper activities with respect to obtaining the accounts,” said Nicholas Berberian, Giura`s attorney.
The grand jury is seeking to determine why it was ”so important” to Giura that Sbertoli not tell the truth, according to court papers. It`s already clear, however, that the Florida stockbroker`s allegations against Giura have cast a deep shadow over what was once a dazzling career.
Clients flocked to the 53-year-old Giura because of his ”uncanny ability to relate well to people,” said a business associate. ”The guy is the most likable man you could ever hope to meet,” said a Chicago attorney. ”He makes a great impression; he looks like everybody`s grandfather.”
Moreover, Giura`s long work hours, frequent trips and time spent socializing with clients were considered remarkable, even in a business filled with ambitious people. ”He`s a driven man,” said a friend.
In Italy, Giura had originally set out to offer spiritual counsel, not investment advice. He left the seminary after a priest recommended him as a research assistant to Edward Banfield. Banfield, a University of Chicago political scientist, was writing a book about the village in southern Italy where Giura was born and needed help with Italian.
Banfield and his wife ”got along famously” with Giura, said Banfield, who now teaches at Harvard University. ”He was extremely intelligent and energetic, and he wanted passionately to get to the U.S.” Added Banfield:
”Many people find him charming, as we did.”
Giura continued doing research work after the Banfields returned to Chicago, and they later paid his way to the United States. He spent less than a year learning English at the University of Michigan before enrolling at the U. of C. in 1956.
Working as a waiter at the university`s faculty club and living much of the time with the Banfields, Giura earned a master`s degree in economics five years later. ”I thought he was a bright and able young fellow,” said economist Milton Friedman, who was then teaching at the U. of C.
After graduating, Giura was hired by Stein Roe on the recommendation of the chairman of the university`s economics department. He quickly impressed the firm`s partners with his work as an administrator of a mutual fund office and was transferred to the account-management department. In 1971, Giura was named a partner.
The one blot on his career was dismissed as insignificant by other Stein Roe partners. Giura advised a handful of the firm`s clients to invest in stock of Olympia Brewing Co., a speculative issue that was being touted by R. Jack Bernhardt, then a broker in Chicago for Loeb, Rhoades & Co., a predecessor of Shearson.
When the stock plummeted in early 1977, Stein Roe clients were among the losers. Loeb Rhoades later agreed to provide $600,000 for possible claims arising from Bernhardt`s stock manipulations, and Bernhardt was sentenced to 10 years in jail.
Informed sources said Giura first became acquainted with George Inserra, one of the former Shearson brokers now said to be under investigation by the SEC, through Bernhardt. Inserra bought Olympia and other stocks recommended by Bernhardt for two upstate New York Teamsters funds, but took the funds out while the investments were still profitable. (Berberian, Giura`s attorney, said Giura and Inserra may have known each other previously.)
In general, however, Giura`s career prospered. He also became something of a civic leader in Oak Park, serving on the village`s zoning and high school boards and as a trustee of Rosary College in nearby River Forest. Giura was a member of the president`s advisory council of Illinois Benedictine College, and sources say he is a friend of Daniel Kucera, former president of the college and now archbishop of Dubuque, Ia. Archbishop Kucera wouldn`t comment. Giura, who lives in a stately red-brick house on one of the best streets in Oak Park, also became known as a devoted family man. When a son wrestled on the high school team and went on to win a state championship, ”I don`t think (Giura) missed a match,” said John Swanson, principal of Oak Park-River Forest High School.
When the SEC began looking into Giura`s affairs in 1983, Stein Roe regarded the inquiry as a fairly routine matter. Court documents have disclosed that the investigation was triggered by a tip that employees in Shearson`s Utica office, including George Inserra and his brother John, were engaging in a scheme under which securities trades were ”parked” in a certain account until it was clear whether they were profitable or
unprofitable.
The winning trades were allegedly transferred from the ”holding”
account into accounts of friends, relatives and associates of the Inserra brothers and Teamsters officials. Unprofitable transactions were ”dumped”
into Teamster pension fund accounts, according to court papers.
The ”holding” account was allegedly called the ”Stein Roe & Farnham General Account” and bore the designation, ”Attn: John Giura,” court documents said. But Giura claimed in sworn testimony before the SEC that he was unaware of its existence, federal prosecutors said in court documents.
The Inserra brothers have handled brokerage business for the upstate New York Teamsters for about 20 years; it was George Inserra who provided Giura`s entree to the accounts, sources said. Beginning in 1981, Stein Roe served as the investment adviser to the Upstate New York Teamsters Pension and Retirement Fund and at least three other funds connected with Teamsters Joint Council 18 of Utica.
Court papers and informed sources indicate that the SEC is investigating the Inserras, pension fund trustee De Perno and Nicholas Gentile, branch manager of Shearson`s Utica office. The Inserras were fired after the investigation came to light and now work at First Albany Corp. Shearson officials declined comment except to say the firm is cooperating with federal investigators.
Meanwhile, the SEC had unearthed evidence of ”apparently fraudulent allocation” by Giura of new stock issues, according to court documents. Sources said those alleged activities had also caught the eye of the Labor Department, whose office of labor racketeering in New York was in the midst of a long-running probe of Teamsters Local 282 on Long Island.
Local 282 is one of the most powerful in the construction industry because it controls the delivery of materials to building sites in Long Island and New York City. In 1982, a federal judge sentenced its former president, John A. Cody, to five years in prison for labor racketeering and tax evasion. Stein Roe replaced American Management Enterprises as one of the union`s two pension fund advisers in 1982. American Management, co-owned by Bentro, and Stein Roe earned a total of $255,370 for advising the fund in the year ended February, 1983, according to Labor Department documents.
Sources said Giura and Bentro met while Bentro was a senior executive of Chromalloy American Corp. of St. Louis. Stein Roe was formerly an investment adviser for Chromalloy, a maker of machine tools and other products, and Giura supervised one of the firm`s accounts.
Also working at Chromalloy until 1979 was Bernard Turi, now a well-connected Utica-based consultant. According to court documents, Giura prompted three stockbrokers to make payments on his behalf to Turi and Robert Sfeir, who are described jointly as being ”associated” with De Perno, George and John Inserra and Bentro.
In the case involving Sbertoli, the Florida broker, Giura allegedly told Sbertoli to hire Turi as a consultant at a rate of $1,000, and later $2,000, a month. According to court papers, Turi did ”virtually nothing” for Sbertoli and his firm but was paid more than $70,000. Giura told Sbertoli he would direct enough brokerage business to him to more than make up for the payments, court papers say.
Sources said Turi, who couldn`t be reached for comment, may have been attempting to help Giura pick up other union business for Stein Roe in upstate New York.
Giura also allegedly requested that Sbertoli in 1982 send a check for $8,165 to Sfeir and enclose a note falsely reflecting that the check was in payment for jewelry, court documents said. Three years later, to substantiate the ”cover story,” Giura allegedly brought a package of 18 gold coins to the office of St. Paul Federal Vice President John Corvino, a friend and the manager of StockService`s Chicago office. Giura had Corvino ship the coins to Sbertoli by Federal Express, court papers said.
Accompanying the coins was a note explaining that Giura had found the coins while cleaning out his office. The package arrived in Florida a day before Sbertoli gave his testimony to the SEC, in which he said that Giura had urged him to lie, according to court papers.
Sfeir, a retired New York state trooper who owns a gym in Utica, is said to have told the grand jury that he gave his check from Sbertoli to Bentro. Sfeir couldn`t be reached for comment.
Sbertoli, who was a broker on LaSalle Street for 20 years before establishing the Florida firm in 1978, wouldn`t return telephone calls. He has since opened a new firm, Florida Discount Brokers Corp., in Marco Island.
Court documents also state that Giura arranged payments to Sfeir from John McGuire, a broker for Kidder, Peabody & Co. in Chicago, and another, unidentified Chicago stockbroker. McGuire falsely stated that two checks to Sfeir in 1982 and 1983 for a total of $16,000 were for ”antique jewelry,”
according to the indictment of Giura.
”It was a legitimate transaction, done years ago,” John Ryan, an attorney for McGuire, said of the two checks. ”We got the jewelry.”
In the wake of the disclosures, Stein Roe hired a consulting firm to review its internal procedures; no significant changes were recommended. The firm no longer handles the New York Teamsters accounts, although its total assets under management have grown by $1 billion, to about $11 billion, from a year ago, according to Marshall Front, a partner.
At St. Paul Federal, where Giura resigned from the board shortly after his arrest, the stock-brokerage service has been renamed Investment Network Inc. and is run from Chicago. After 27 years at the thrift, Corvino, who says he never knew the contents of the package for Sbertoli, took early retirement at age 58.
Corvino, who says he is ”confused” by the entire episode, said Giura
”is a fine, upstanding gentleman.” He added: ”People can`t believe anything like this happened.”
