Dozens of brokers from John Thomas Financial Inc., the boiler room that closed after regulators accused founder Anatasios “Tommy” Belesis of fraud, have found new employers in New York's financial district.
George and John Belesis, brothers of John Thomas founder Tommy Belesis, moved about seven blocks from their old office on Wall Street to join Portfolio Advisors Alliance Inc. in June along with 14 colleagues, according to Financial Industry Regulatory Authority records. At least 16 other ex-John Thomas brokers have joined National Securities Corp. this year, most at 80 Broad St., five blocks away from the defunct firm's offices, the records show.
“We hired a few John Thomas guys but very selectively,” Mark Goldwasser, chief executive officer of National Securities, said in a phone interview, adding that “it's not true, not fair and un-American” to assume they engaged in wrongdoing.
John Thomas, accused by regulators of defrauding investors in a penny stock and charging inflated fees to a hedge fund, took more than $100 million in commissions over its six-year history. Trainees generally weren't given chairs and earned as little as $300 a week to pitch stocks with memorized scripts, Bloomberg News reported in February.
Tommy Belesis's lawyer, Ira Sorkin, said the allegations are “not supportable” and declined to say more. Another one of his lawyers, Robert Bursky, said in February that John Thomas raised money for legitimate companies and that its brokers didn't use scripts.
Ron Cantalupo, regional managing director at John Thomas, is among those who joined Portfolio Advisors Alliance. Finra alleged that he threatened and intimidated other brokers in its complaint against Belesis's firm. He declined to comment, as did Howard Allen III, who runs the company that owns Portfolio Advisors Alliance.
The other brokers who switched firms haven't been accused of wrongdoing by regulators. George Belesis, who was John Thomas's president, didn't return messages seeking comment.
Brokers who learned the business at firms accused of fraud often switch jobs or start new companies, according to Phil Feigin, a former Colorado securities commissioner who investigated many boiler rooms. Several who worked at Stratton Oakmont Inc., the Long Island boiler room that's going to be depicted in a movie called “The Wolf of Wall Street,” started their own companies that were in turn shut down.
Boiler rooms employ salespeople to call as many strangers as possible and urge them to buy shares handled by the firm.
“With boiler rooms, or things like them, there's always been this analogy that it's like a blob of mercury that you hit with a hammer,” Feigin said in a phone interview. “You might get the big blob but the beads spread all over the place and now they're well trained.”
That training at John Thomas included using high-pressure sales tactics to approach hundreds of strangers a day, ex-employees said in February. Junior brokers were told they had to stand to sound more animated, they said. John Thomas told regulators it was withdrawing from the securities business last month, the records show.
There's nothing wrong with calling strangers to pitch them stock, National Securities' Goldwasser said.
“Let me tell you something, I get cold-called by all the wirehouses all the time,” he said, referring to the biggest brokerages. “Cold calling, that's the American way.”