Sniffing Out a Line of Coke Brokers

By Stephen Koepp

The behavior of the stockbrokers at Brooks, Weinger, Robbins & Leeds might have made for a biting off-Broadway play about sleazy morality on Wall Street -- if only the firm were fictional. The young professionals at the Manhattan penny-stock trading firm allegedly sold cocaine in stairwells, traded drugs for insider stock tips and routinely signed false names on important documents, among other offenses. Last week seven of the not-so-satirical brokerage employees were hauled away in handcuffs as part of a 19-person drug bust; it was one of the biggest undercover actions ever carried out in the Manhattan financial district. The bust's fitting code name: Operation Closing Bell.

Rumors of heavy use of cocaine and other drugs have long been endemic on Wall Street, where incomes are often astronomical and the competitive pressure hyperintense. Besides the Brooks brokers, federal agents arrested a worker at Advest, a midsize brokerage, and one at Allied Capital, a money-management firm. They also hauled off five lower-level employees of New York's Depository Trust, the private clearinghouse where some $2.2 trillion in stock and bond certificates are stored for safekeeping.

Criminal charges against the Brooks employees involved only drug possession and sale, mostly of cocaine. Brokers at the firm allegedly dispensed the drug by the ounce to customers and colleagues as a way to gain a competitive edge. But there is apparently more to come. Investigators plan to turn over alleged evidence of rampant financial misdoing at Brooks -- including insider trading and forgery -- to the Securities and Exchange Commission.

The case that broke open last week was only the first chapter in an extensive clampdown on drug dealing in the financial community. Authorities initially picked up the trail in Brooklyn, where they took notice of a mink- coated brunet named Theresa Masi. A known consort of drug dealers with Mafia connections, Masi made regular rounds of Wall Street executive suites. Authorities learned that Masi was delivering cocaine weekly to five top-level * managers. Under a law-enforcement policy to charge dealers only, those users were never prosecuted, but their descriptions of drug consumption on Wall Street inspired the U.S. Drug Enforcement Agency to launch an undercover probe.

Infiltrating Brooks was not terribly difficult. After going to work for the firm as an assistant broker, one undercover agent claims she was soon approached by colleagues who tapped their noses and asked if she "partied." Apparently the Brooks dealers were just as indiscreet in their activities outside the office. A DEA affidavit cites one instance in which a Brooks employee sent a customer a free sample of heroin via the company's messenger service.

In more respectable Wall Street circles, brokers winced at yet another black eye for the beleaguered stock-trading industry but applauded the sweep. Top officials at better-known brokerages claimed that the undercover action came partly as a result of their complaints about drug dealing in Wall Street's plazas and office corridors. Said one top stock market executive of the busted brokers: "They are the dregs of the industry."

With reporting by Elaine Shannon/New York