2nd Whistleblower Claims NC Security Company Broke Law

 

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Posted on Thu, Dec. 17, 2009

 

2nd fired exec claims NC security co. broke law

EMERY P. DALESIO

The Associated Press

RALEIGH, N.C. – A second former board member for a small, politically connected security gear maker said the company’s chairman tried to persuade him to join an insider trading scheme.

Law Enforcement Associates Corp. reported former sales director and board member Martin Perry’s claims of multiple legal violations to the Securities and Exchange Commission.

Perry said company board chairman and state Sen. Tony Rand, D-N.C., invited him to join a plan to manipulate the company’s stock. Perry said he and fired Chief Executive Paul Feldman were interviewed by FBI agents about their claims in September.

A letter Perry wrote to the U.S. Labor Department which outlines the charges closely tracks earlier allegations by Feldman.

Perry, like Feldman, said Raleigh-based LEA also may have violated export laws by working with a company in which LEA founder John Carrington had an ownership interest.

Both the company and Rand denied Perry’s allegations.

“It’s basically just a rehash” of Feldman’s earlier claims, Rand said Wednesday. “Any allegation of wrongdoing are absolutely untrue.”

Rand said LEA’s directors plan to meet Thursday, and will likely discuss what an outside attorney has learned about the allegations.

The company said in its filing with the SEC that it does not believe Perry’s allegations, “nor does the company believe the resolution of these matters will have any material effect upon the financial statements or other information contained in its reports to the SEC.”

LEA said it believes the two former executives were seeking federal whistle-blower protections available under federal securities law.

Carrington, a former Republican state senator from Raleigh, pleaded guilty in 2005 to violating U.S. export laws when Sirchie Finger Print Laboratories, a company he once headed and that spun off LEA in 2001, illegally shipped more than $1.2 million in equipment to China through middlemen. Carrington agreed to a denial of export privileges for five years.

Perry and Feldman said they warned the LEA directors against the company doing business subsequently with Safe Source Inc., because Carrington had an ownership stake in the company.

Perry and Feldman said dozens of state politicians owned stock in LEA.

Gov. Beverly Perdue bought about $1,000 worth of LEA stock in 2002 when she was lieutenant governor, her spokeswoman said earlier this month. The stock was not listed on her ethics disclosure form until 2006, when its value topped the $10,000 minimum threshold for reporting, spokeswoman Chrissy Pearson told The News & Observer of Raleigh. Perdue still owns every share of the stock she purchased in 2002, Pearson said.

Perdue has asked at least four state agencies to examine nearly $200,000 in buys of surveillance equipment from LEA since Rand became the company’s chairman in 2003. Some gear was bought without competitive bidding.

Rand has said he is leaving the Senate this month to become Perdue’s parole chief.

SOURCE Philadelphia Business Today/ The Associated Press

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