WASHINGTON - An investment valuation expert who served as an expert in numerous class-action securities lawsuits pleaded guilty yesterday to deceiving federal examiners of a venture capital fund backed by the Small Business Administration.
The investment analyst, John Torkelsen, entered the guilty plea in federal court here pursuant to a plea agreement with prosecutors that recommends a five-year prison sentence on the felony fraud charge.
Torkelsen is reportedly involved in an ongoing grand jury investigation into alleged illegal payments to clients by a New York-based class-action plaintiffs' firm, Milberg Weiss. In June, the grand jury returned indictments against two California lawyers, Seymour Lazar and Paul Selzer, who were not members of Milberg Weiss but helped the firm file more than 50 securities lawsuits. The attorneys pleaded not guilty.
A spokesman for the prosecutors, Channing Phillips, said yesterday's proceedings were not connected to the Los Angeles-based investigation. The plea agreement does not contain any language requiring Torkelsen to cooperate with the inquiry into the law firm.
"John Torkelsen has served as a plantiffs' expert in many securities class actions," a spokesman for Milberg Weiss, Jeff Ingram, said in a statement. "We understand that the charges against him are unrelated to any of the class-action cases in which he has served as an expert."
Prosecutor John Griffith said Torkelsen broke federal rules by drawing at least $5 million in management fees out of the investment company he ran, Acorn Technology Fund, and obscuring the payments with bank loans that were backed by fund assets. A federal judge in Philadelphia froze the fund in 2003.