The former president of a publicly traded Raleigh company is accusing Tony Rand, one of the state's most powerful lawmakers, of insider trading and other illegal actions.
In a complaint filed with the U.S. Department of Labor, Paul Feldman, who claims he was illegally fired as president of Law Enforcement Associates in August, alleges that Rand had a scheme to profit from manipulating the value of LEA stock.
Rand, the Fayetteville Democrat who plans to step down from the state Senate this month, has been chairman of LEA's board since 2003. The company, which makes security and surveillance equipment, was spun off in 2001 from Sirchie Finger Print Laboratories, a Franklin County company started by former state Sen. John Carrington.
In his complaint, Feldman also alleges that Rand told another LEA executive that he previously had traded the stock of Raleigh-based First Citizens Bank based on inside information he had gotten from former president Frank Holding. Rand said that he "planned to do the same to LEA stock," Feldman wrote.
Rand called the charges "insane" and "hogwash."
"He's a disgruntled ex-employee," Rand said Wednesday in a phone interview. "I'm embarrassed that Frank Holding has even been mentioned in this mess. But I guess that is part of it, when you are in business and in politics. People think you are fair game and maybe you are."
LEA disclosed Feldman's allegations, including his Nov. 17 letter to the Labor Department, in a filing with the Securities and Exchange Commission on Tuesday.
Feldman also alleges that Rand and other LEA board members violated SEC rules by falsifying minutes of board meetings and omitting information in SEC filings. He also contends that LEA sold video equipment and other products through a sister company to police in the Dominican Republic. That violated federal export laws, Feldman alleges.
Feldman wrote that he has been interviewed by special agents for the FBI and IRS related to his allegations.
Rand said he has not been contacted by any law enforcement officials. "This offends me," he added. "There's no truth to any of this."
A spokeswoman for First Citizens wasn't immediately available for comment.
LEA officials responded in its SEC filing on Tuesday that Feldman's "claims are groundless, and are an attempt by a disgruntled former executive to seek retribution from the company."
LEA "does not believe the allegations ... have any merit" and plans to "vigorously defend against these actions."
The company also wrote that Feldman was removed as CEO in August for "insubordination" and "in the face of poor performance."
Feldman claims that Rand and other LEA board members fired him in late August when he was hospitalized for two days because of a "mini-stroke" and unable to attend the meeting to defend himself. Feldman couldn't be reached for further comment.
Feldman is seeking reinstatement as CEO and president of LEA, or economic damages for lost compensation, and "damages to his career, reputation and earning capacity." Feldman had been LEA's top executive for 19 years.
The company has struggled to boost sales of its products, including under-car inspection systems, explosive detection kits and GPS tracking equipment, to law enforcement agencies, nuclear power plants, the military and other customers.
LEA moved its headquarters to Raleigh from Youngsville last year, and has been cutting costs and jobs. It now employs about 25. Chief financial officer Paul Briggs couldn't be reached for comment.
LEA reported last month that net sales fell to $1.9 million during the third quarter, down 21 percent from the same quarter last year. LEA's net loss was $99,000, compared to net income of $96,000 last year.
Its stock now trades for pennies. In 2004 and 2005, when Feldman alleges the insider-trading scheme occurred, LEA's shares surged above $4. At its peak, in January 2005, the stock closed as high as $10.86.
On Wednesday, the shares rose 4 cents to 15 cents.
