Investment News - The Leading News Source for Financial Advisors

FBI investigating manager and firm in Michigan

• 
• 
• 
• 
• 

By Bruce Kelly

October 22, 2007 6:01 am ET

The FBI is investigating a money manager and his firm concerning a series of private placements that recently collapsed, potentially costing at least 1,500 investors millions of dollars.

In a letter to investors last Monday seeking information about Ed May and his investments, the FBI notified investors of the criminal investigation into Mr. May and his Lake Orion, Mich.-based firm, E-M Management Investments LLC.

In addition, Michigan securities regulators are investigating Mr. May, who allegedly has ties to disgraced baseball legend Denny McLain, and whose recent attempt to launch a high-stakes golf tournament in Las Vegas flopped.

Linda Cena, securities director for the Michigan Office of Financial and Insurance Services, confirmed that state regulators are investigating Mr. May, but she declined to comment about any specifics of the inquiry.

Online searches turn up no mention of E-M Management Investments LLC.

A host of details are beginning to emerge about Mr. May, who filed for Chapter 11 bankruptcy protection this month in U.S. Bankruptcy Court in Detroit. He now has an assignee for his creditors, who is responsible for marshaling his assets and satisfying claims.

Investors in a series of private partnerships that Mr. May managed stopped receiving monthly dividend checks within the past two to six months, according to attorneys familiar with the case and one investor who lost money. That stoppage ignited a furor from the investors and inquiries from securities regulators.

On Yahoo!, an information-sharing group called Victims of Ed May was launched in August and now has 167 members. The group's symbol is a roll of dollar bills in a mousetrap.

"In August, our dividend check bounced," said one investor, who asked not to be identified. The investor said that $4.25 million in dividend checks bounced that month alone.

The investor said that his family invested $150,000 in total and received back $50,000 from monthly checks.

Michigan regulators are also investigating Mr. May's former business colleague, Frank Bluestein, a registered representative who sold shares in many of the partnerships (InvestmentNews, Oct. 15).

Mr. Bluestein, whose practice was Maximum Financial Group of Waterford, Mich., invested in the partnerships and also lost money, his attorney said this month. He re-signed from GunnAllen Financial Inc. of Tampa, Fla., last month.

Officials from the Securities and Exchange Commission declined to comment about any potential investigation of Mr. May.

An attorney who represents him, Harold Z. Gurewitz of Gurewitz and Raben PLC of Detroit, said: "It's only an investigation. It's not even an allegation," and such investigations often take months.

According to one pitch to prospective investors, E-M Management managed "several entities providing a variety of telecommunications services to truck stops, hotels/motels and casinos throughout the continental United States."

The firm had agreements with Harrah's Entertainment Inc. of Las Vegas to serve its properties in Atlantic City, N.J., and TravelCenters of America LLC of West-lake, Ohio, to provide services at six truck stops and motels, according to the investment pitch in a letter dated Aug. 18, 2003.

Mr. May warned the investors that they needed to act quickly if they wanted a chance to act on his offer, according to the letter.

"Because the history of these projects has been full subscriptions within a short time period, it is not possible to make all projects available to everyone," the letter stated.

Investors needed to invest a minimum of $26,000 to purchase shares in that deal, according to the prospectus.

Attorneys familiar with the case said that clients' investments with the partnerships ranged from $10,000 to $1 million.

Mr. May reportedly has a history of brushing up against the famous and the infamous in the world of sports, with the emphasis on money.

According to a biography of a former owner of the Detroit Tigers, he was an agent for Mr. McClain, the one-time great Tigers pitcher from 1963 to 1970 and the last pitcher in professional baseball to win 30 games during one season.

In 1969, Mr. McLain "was investing in a variety of businesses that led to his financial insolvency," according to "John Fetzer: On a Handshake: The Times and Triumphs of a Tiger Owner" (Wayne State University Press, 2000) by Dan Ewald and Al Kaline.

"When he switched agents and his new representative, Ed May, wanted to purchase McLain's baseball contract, the Tigers immediately informed" the baseball commissioner at the time, Bowie Kuhn, according to the book.

Mr. McLain later served time in prison for drug trafficking, embezzlement and racketeering.

More than three decades later, Mr. May's efforts to start a high-stakes golf tournament in 2005 went belly up, according to an article on the website LasVegasGolf.com.

Mr. May "put his heart, soul and tremendous amount of money into trying to make this thing work," according to Jack Stoberski, a Las Vegas agent who worked to launch the tournament.

Mr. May typically remained behind the scenes while Mr. Bluestein kept clients pumped up by throwing steak dinners and parties at sporting events, according to the investor who asked not to be identified.

Mr. Bluestein "had a suite at the Palace of Auburn Hills," where the NBA's Detroit Pistons play, the investor said. "Frank would take [the] microphone and say, 'How many of you got your Ed May dividend checks this month?'"

Bruce Kelly can be reached at bkelly@crain.com.

• Email
• Print
• Share
• RSS
• Reprint