A far-reaching corruption probe in Florida apparently has brought down the nation's biggest minority-owned municipal bond firm and one of its founders
By EDDIE DOMINGUEZ Associated Press Writer
Wednesday, October 2, 1996 6:27 pm EDT
MIAMI (AP) -- A far-reaching corruption probe in Florida apparently has brought down the nation's biggest minority-owned municipal bond firm and one of its founders.
Calvin Grigsby, co-founder of Grigsby Brandford & Co. in San Francisco, is a figure in the bribery investigation that has ensnared a growing number of major players in Miami politics. Last month, without giving a reason, Grigsby suddenly resigned from the firm he founded in 1981. He has hired former O.J. Simpson defense attorney Johnnie Cochran.
His firm -- once headed for robust growth and trend-busting earnings -- was unraveling this week with the resignation of the company's other two partners. The fallout left Grigsby Brandford & Co. without Grigsby, newly appointed chairman and co-founder Napoleon Brandford III and newly named chief executive Suzanne Shank.
The firm "underwrote more than all the other women- and minority-owned firms put together," said Muriel Siebert, who owns a New York securities firm that has hired Brandford and Shank. "To see somebody that has built that up through so much work come down like this -- yes, it is pathetic."
Siebert's firm, Muriel Siebert & Co., is forming a new unit headed by Brandford and Shank, who took with them more than half of Grigsby Brandford's 70 employees.
Grigsby Brandlord was one of the nation's largest municipal underwriters, ranking 19th last year, according to the trade publication Bond Buyer. The firm handled 65 bond issues in 1995 totaling more than $1.23 billion.
Among its more high-profile deals last year, Grigsby Brandford managed the $200 million bond sale that returned the NFL's Raiders to Oakland. The more than $700 million in deals being investigated in South Florida include a bond issue to finance the Miami Arena, another to pay for a sewer project and a third for a waste management operation.
"There was talk that Grigsby was really going to be a powerhouse, that they were really going to become the first black firm with the capacity to grow into something like Goldman Sachs," said William Michael Cunningham, head of Creative Investment Research. The Washington, D.C. company publishes a report on minority- and women-owned financial companies.
The firm appeared to be bucking a trend which has seen declining revenues in the municipal bond business. Repeated calls to Shank, Brandford and Grigsby were not returned. Cochran could not be reached but has previously denied any wrongdoing by Grigsby.
Grigsby left the firm because of recent scandals, Brandford, who once was a deputy finance director in Florida's Dade County, told Bond Buyer last week. He had characterized Grigsby's sudden departure as "an act of nobility, not an admission of guilt."
"He wanted to protect the firm," Brandford said.
But Cunningham said the firm's dismemberment "leads me to believe the allegations are very serious" and the charges "would damage the franchise value."
Grigsby, a flamboyant financier and major donor to Democratic political campaigns, has maintained a low profile since his resignation, when allegations surfaced that linked him to a kickback scheme with Metro-Dade Commissioner James Burke.
The probe, dubbed "Operation Greenpalm," already has resulted in charges against Miami's former city manager, a city commissioner, a lobbyist and the city's former budget director.
FBI agents showed Burke a videotape last week that investigators claimed shows the commissioner and Grigsby discussing a $300,000 kickback for steering business to the bond firm.
The video showed Burke, Grigsby and another bond dealer, Howard Gary, dining at a chic San Francisco hotel in August. Gary, a former Miami city manager, is cooperating with prosecutors.
"I don't think there was anything there that I construed as a bribe," said Burke's lawyer Fred Schwartz." I couldn't tell what was being discussed because the sound quality was so poor." Burke, who has denied any wrongdoing, did not return messages seeking comment.
"Commissioner Burke was trying to make sure that qualified blacks who had the ability to manage deals were given the opportunity to manage (bond) deals," Schwartz said.
A senior Securities and Exchange Commission official wouldn't discuss the Grigsby case or published reports about the SEC's role in the matter. But the official, who spoke on condition of anonymity, said "most of the information appears to be suggestive of issues on the criminal side," indicating that the FBI, not the SEC, was taking a lead role in the probe. The San Francisco Examiner and The Miami Herald have reported that the SEC is also investigating.
Last month, the California Fair Political Practices Commission fined Grigsby $5,000 for a questionable loan to a lawyer, who later contributed the money to a mayoral candidate's campaign.
Copyright 1996 The Associated Press
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