Rand has a second accuser

RALEIGH -- ******

CORRECTION

A STORY ON PAGE 1A ON THURSDAY INCORRECTLY REFERRED TO FIRST CITIZENS BANK IN SOUTH CAROLINA AS A SUBSIDIARY OF THE RALEIGH BANK OF THE SAME NAME. THE TWO BANKS ARE SEPARATE LEGAL ENTITIES, BOTH MAJORITY OWNED BY THE HOLDING FAMILY OF RALEIGH.

****** A former board member at Law Enforcement Associates says state Sen. Tony Rand tried to recruit him this year to participate in an insider trading swindle.

In a letter to federal regulators made public this week, Martin Perry recounts an Aug. 26 conversation during which he said Rand, chairman of the company's board of directors, schemed to manipulate LEA stock to enrich himself and other prominent elected officials.

A Fayetteville Democrat who is among the state's most powerful politicians, Rand said Wednesday that he remembers taking Perry to lunch that day and that the two discussed ways to increase the value of LEA's stock. Rand said that nothing in that conversation could be construed as a plan to break the law or manipulate the share price.

Perry is the second member of LEA's board to level accusations against Rand.

In a similar letter made public this month, Paul Feldman, LEA's former chief executive officer and a board member, accused Rand and company founder John Carrington, a former Republican state senator from Wake County, of numerous crimes.

Feldman and Perry said they saw a list of LEA shareholders who traded in the company's stock as it soared in late 2004 and early 2005 from pennies a share to more than $12. Those investors included 50 North Carolina politicians and state officials, they say, including Gov. Bev Perdue and former Gov. Mike Easley.

A spokeswoman for Perdue said earlier this month that the governor owns a small amount of LEA stock and that she has never sold any or profited from her investment in any way.

Feldman and Perry, who was the company's sales director in addition to being a board member, said they are cooperating with the FBI and U.S. Attorney's Office in Raleigh in an investigation of LEA. They said they were ousted by Rand and other LEA board members after refusing to disclose the details of their conversations with federal officials.

Bobby Higdon, chief of the criminal division in the office of U.S. Attorney George Holding, said he could not confirm or deny whether there is any ongoing investigation regarding LEA. Holding, a Republican appointed by President George W. Bush, is also conducting a wide-ranging investigation into the dealings of Easley.

First Citizens stock

Perry's version of the Aug. 26 conversation, as recounted in the letter released by LEA Tuesday as part of a disclosure to shareholders, is that Rand claimed to have profited handsomely from trading in the stock of First Citizens Bank with inside information from Frank Holding.

It is not clear whether the reference is to Frank Holding Jr., the CEO of First Citizens BancShares, or his father, Frank Holding Sr., who has also served as an executive at the bank.

Frank Holding Jr. said in an interview last week that there is no basis to the claim that Rand participated in an insider trading scheme at the family-run bank. The late Robert Holding Jr., a former chairman of First Citizens, is the father of George Holding, the U.S. Attorney.

According to Perry, Rand claimed he bought the bank's stock at $60 a share and sold it at more than $700. Perry claims Rand then said he intended "to do the same thing with LEA stock."

A secret recording

Rand said Wednesday he never mentioned either the junior or senior Frank Holding in his conversation with Perry. However, Rand said he has long owned stock in both First Citizens and the Raleigh bank's South Carolina subsidiary, though he has never sold shares.

"How is it an insider trading scheme if you never sold any?" Rand asked rhetorically. "It's absurd. Any type of manipulation scheme would require that you profit from something."

Rand also said he sold very little LEA stock when it hit its peak in 2005, and that he now wishes he had sold it all. Rand owns 140,334 shares in the company, which manufactures and surveillance and security equipment.

Rand said he believes Perry secretly recorded their conversation with one of LEA's stock surveillance devices, possibly a wristwatch with a hidden wireless audio transmitter. He said Perry should make that recording public to clear up any misunderstanding about what the two discussed.

Reached at his home Wednesday, Perry said he had been advised by his lawyer not to make any public comments about LEA or Rand. He stands by the accuracy of his account in the letter to federal officials, he said.

Rand shocked many political observers when he announced Nov. 4 that he would resign from the Senate at the end of this month, a full year before his current term is set to expire.

Feldman filed his letter to federal regulators Nov. 17. Rand said the timing of the two events is coincidence, and that his leaving elected office has nothing to do with allegations involving LEA.

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