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By profession, he was a company savior, a guy who specialized in taking over ailing companies and performing miraculous turn-arounds. He’d previously salvaged about a dozen privately held companies and he was ready for a new challenge. On September 12, 1996, seven years after Mitchell Hammer came on board at Sheffield Industries, Hammer pleaded guilty to conspiracy to commit fraud and two other related charges in federal court in Miami. He faces between 108 and 135 months in prison when he’s sentenced in January.
Just before the case was to go to trial, Hammer agreed to plead guilty to reduced charges. The trial would have addressed securities fraud, money laundering and making false statements in a bankruptcy proceeding as well as the charges he agreed to plead guilty to.
Big losers were individual investors in the Hialeah, Florida company ($20 million) and Continental Bank of Chicago ($5 million). The problems are alleged to have begun in September 1990 when Sheffield executives began falsifying financial information to make the company appear financially sound. Even though the company was actually losing hundreds of thousands of dollars every month, the falsified records led Continental Bank to extend a $10 million line of credit. Then, when Hammer took Sheffield public, the initial stock offering raised over $20 million from investors. Further shenanigans included taking money from the bank (money laundering) and sending it to outside companies (securities fraud) who would, in turn, send the money back to Sheffield. And finally, to conceal the previous frauds, Hammer allegedly participated in the creation of false documents that were used in the eventual 1993 bankruptcy of the company.
© Copyright 1996 Alikim Media