MADISON - U.S. Senate candidate Joe Checota's companies have been scrutinized in at least four federal probes of alleged securities-law violations, including stock manipulation and insider trading, public records show, a copyright story in today's Wisconsin State Journal said.
One of those Securities and Exchange Commission investigations remains open, and one directly targeted a Checota company, the agency confirmed.
Because of the SEC's tight rules on release of information and an eight-month backlog on requests for agency records, details are few on the probes. But the Wisconsin State Journal also found Checota maintained close business ties to Stuart-James Co., a Denver securities firm, after it was accused of violating securities laws in selling stock of one of Checota's companies.
There is no evidence Checota personally engaged in wrongdoing. The Milwaukee multimillionaire businessman, who is seeking the Democratic nomination for the Senate seat held by Republican Bob Kasten, has said his record is clean.
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"I certainly have never been accused of any wrongdoing on the part of any regulatory body," Checota said in a May interview.
Checota predicted a close look at his business background - including accomplishments touted in his television ads - will prove his worthiness for the Senate. But even though SEC officials said Checota was free to discuss the cases, he turned down a request last week to be interviewed about his brushes with the SEC and his ties to Stuart-James.
The State Journal June 4 reported on allegations that Checota misused company money while heading his first firm, American Medical Buildings, a medical office building developer. A secret investigation, conducted after Checota was ousted in 1983 as head of the firm, alleged the company improperly paid for expensive artwork and remodeling jobs at Checota's lakeside home.
The findings were not made public as company officials negotiated an out-of-court settlement with Checota, who dropped a lawsuit seeking reinstatement to his job.
SEC officials cited the following cases linked to Checota's companies in responding to a Freedom of Information Act request from the newspaper:
UMB Equities, a subsidiary of medical building developer Universal Medical Buildings, Checota's current flagship company, was the subject of an SEC investigation from August 1986 to June 1987. The investigation was dropped and no charges were filed. Checota, founder of Universal Medical Buildings, has been president and director of UMB Equities since 1985, according to U.S. Senate financial-disclosure forms.
Stock issued by UMB Equities came under SEC scrutiny in a major case the agency brought in 1989 against Stuart-James Co., a penny-stock brokerage firm based in Denver. The case, which is pending, includes allegations Stuart-James employees manipulated UMB Equities stock prices to artificially high levels by failing to tell customers about excessive mark-ups.
Stock issued by Checota's first company, American Medical Buildings, came under SEC scrutiny from February 1984 to November 1987 as part of an investigation into activities at R.F. Hengen, a New York City public-relations firm. Ronald Hengen, head of the firm, was accused of insider-tipping violations - that is, passing along inside knowledge to investors. The case was dropped because of flawed testimony from the government's chief witness, the Wall Street Journal reported.