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Oct 14, 2009 12:16 PMPublication: The Southampton Press

Quogue Village mayor pleads guilty to securities fraud

Oct 14, 2009 12:16 PM

Quogue Village Mayor George Motz pleaded guilty to securities fraud in federal court on Tuesday evening, admitting that he “cherry-picked” profitable trades for his Manhattan investment firm.

Appearing before U.S. District Court Justice Arthur D. Spatt in Central Islip just after 5 p.m., Mr. Motz, surrounded by his family, pleaded guilty to one count of securities fraud, a felony. The plea was not part of any deal with the U.S. Attorney’s office that would guarantee Mr. Motz a reduced sentence, although prosecutors did agree to drop a second felony charge, of document alteration, that was filed against him in August 2008, when he was first indicted. Investigators had claimed that he doctored paperwork in an attempt to cover up the fraud.

At the end of the proceedings Tuesday, Mr. Motz was released on the same $500,000 bond that he had posted the day after his indictment. He will be sentenced at a later date, still undetermined.

Authorities have said that the charges are unrelated to Mr. Motz’s work as mayor of Quogue Village, a position he has held since 2002. It is unclear when, or if, he plans to resign as mayor following his guilty plea, but according to state law, a person convicted of a felony cannot hold public office.

The charges against Mr. Motz resulted from an investigation conducted by the U.S. Securities and Exchange Commission. Prosecutors said he illegally took in more than $1.4 million for his investment company, Melhado, Flynn & Associates (MFA), between November 2000 and June 2005. He is the president and chief executive officer of the company.

Mr. Motz was facing a sentence of up to 45 years in prison if convicted of both charges, according to federal authorities—up to 25 years on the securities fraud count, and up to 20 years on the document alteration charge—plus fines. Following Tuesday’s plea, he faces up to 25 years in prison, the maximum sentence allowed for securities fraud, but in court on Tuesday, prosecutors said federal sentencing guidelines would put Mr. Motz’s sentence somewhere between 12 and a half and 15 and a half years.

Wearing a black suit, light blue shirt and dark blue tie, Mr. Motz was solemn during the proceedings and answered Justice Spatt’s questions curtly as his wife, Quogue Village Justice Kittric Motz, stood behind him.

Prior to entering his guilty plea, Mr. Motz admitted to buying blocks of stocks and waiting until the end of the day to see if the trades were profitable. If the trades were profitable, Mr. Motz said he would assign them to the MFA propriety account. If they were not, he assigned them to one of his clients’ discretionary accounts.

“I took the profits from those [trades].... with the intention of benefitting my firm, MFA,” he said.

He then apologized to his family, his clients and the court.

Justice Spatt noted that it was unusual that Mr. Motz would plead guilty, thus relinquishing his right to a trial, without any sort of plea agreement. He warned Mr. Motz that by pleading guilty, he was giving up his right to appeal and could face up to the maximum of 25 years in prison.

“You will give up some very valuable rights [by pleading guilty],” Justice Spatt told Mr. Motz before accepting his guilty plea. “This is a very serious offense.”

Mr. Motz’s attorney, G. Robert Gage of Manhattan, asked Justice Spatt to disregard the federal sentencing guidelines, saying the range of sentence the guidelines call for in this case is inappropriate.

Justice Spatt said that he did not know what sentence he would issue, but said it will most likely include a fine and restitution payments to Mr. Motz’s clients. He noted that the sentence could include jail time that was higher or lower than what the federal guidelines called for.

The judge ordered Mr. Motz to return to the federal probation office early Wednesday morning so that a pre-sentencing report could be prepared.

Mr. Gage and Mr. Motz could not be reached for comment.

Mr. Motz’s son, Tim Motz, who is a spokesperson for the Suffolk County Police Department, declined to comment on his father’s plea after the proceedings.

In November 2008, MFA was also indicted on the same charges leveled against Mr. Motz. If convicted, the investment firm could be forced to pay a penalty of up to $2.8 million.

The indictment against Mr. Motz stated that from November 2000 until June 2005, Mr. Motz engaged in a fraudulent trade allocation scheme known as “cherry-picking,” a practice in which a person executes trades without assigning those trades to a specific trading account and later places the profitable trades in his own account. An independent investigation of MFA by the Securities and Exchange Commission between November 2003 and December 2003 alleged that during that time Mr. Motz altered documents, making it appear as though the trades in question were allocated earlier in the day than when they were actually processed, according to a copy of the indictment against him.

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Copy editor:

". . . a practice in which a person executes trades without assigning those trades are executed without being assigned to a specific trading account."
By highhatsize (4073), East Quogue on Oct 13, 09 8:40 PM
1 member liked this comment
thanks HHS
By BOReilly (135), Hampton Bays on Oct 13, 09 8:48 PM
I'm really starting to think any pol in an executive branch long enough, who has access to funds, eventually misuses his power. That's why every office should have strict term limits.
By Mr Suffolk (113), Twin Forks on Oct 13, 09 8:46 PM
Yea, so unelected staff get all the "power" and can make decisions without recourse from the public? No thanks. I'd rather have a chance to throw the bums out when they are not responsive to their citizens.

BTW, Motz activities are UNRELATED to his job as Mayor. No one has accused him of any impropriety in office and annual budget reviews for Quogue have not revealed any untoward activity on the part of anyone in Quogue -- just for the record.

Finally, Motz will have to account ...more
By JimmyKBond (156), Hampton Bays on Oct 14, 09 9:39 AM
Kabot will soon be available for the job,
By littleplains (305), olde england on Oct 13, 09 10:55 PM
Highhatsize: Is this the same Motz as the judge in your neighborhood? And doesn't their son have some kind of tax-paid job? If so - and I admit I am not all that familiar with Quogue - East, the Village, or otherwise - why is NO ONE mentioning these facts?!? Unless I am mistaken - and if I am - this so-called "newspaper" should print disclaimers about the relations. Enlighten me, please.
By Board Watcher (532), East Hampton on Oct 13, 09 11:05 PM
To Board Watcher:

I believe that his wife is the judge of the Quogue Village Court. Don't know about his son's status. Since this is breaking news, follow-ups will probably speak about his wife, especially when he resigns as mayor of Quogue.
By highhatsize (4073), East Quogue on Oct 13, 09 11:34 PM
To Board Watcher:

Here is a link to the Newsday account of the plea. It mentions that his son, Tim, is an SCPD spokesperson:

http://www.newsday.com/long-island/suffolk/quogue-mayor-pleads-guilty-to-1m-investor-fraud-1.1521829

Strangely, the Newsday story indicated that Motz DOES NOT have a plea agreement with the prosecution. There is the possibility that he could spend 25 years in jail, but I'm guessing he will be sentenced to one year and get out in 8 months, especially ...more
By highhatsize (4073), East Quogue on Oct 14, 09 12:00 AM
I'm glad Ms. Chnese referenced Mr. Motz' quotes from 14 months ago. Remind anyone of another, more recent, public official in trouble with the police?

Kittric Kotz is, I believe, the estranged wife of the miscreat Mayor, and their son Tim used to work for the Southampton Press. He also ran against Legislator Jay Schneiderman four years ago and was thrashed at the polls.

By Frank Wheeler (1815), Northampton on Oct 14, 09 12:55 AM
Absolute power corrupts absolutely. Why is it a surprise. The powerful feel that they can do what they want and never get caught. Look at Spitzer and even Patterson have ventured outside their marrages. Then of course the latest smuck Madoff and the Kennedys made their money as rum runners. Motz is just one of a long line, stay tuned for the next one. Its really pretty sad when you think about it.
By North Sea Citizen (545), North Sea on Oct 14, 09 7:53 AM
can you dislike a comment?
By frmreastendr (7), Rochester on Oct 23, 09 10:21 AM
Reading some of these comments, I am reminded of Don Henley singing:

"Kick 'em when they're up.
Kick 'em when they're down.
Kick 'em when they're stiff.
Kick 'em all around.
Dirty little secrets.
Dirty little lies.
We've got our dirty little fingers in everybody's pie.
We love to cut you down to size.
We love dirty laundry."
By SamIAm (35), hampton bays on Oct 14, 09 8:15 AM
1 member liked this comment
Of course this would be the case, stock losses are for the little people. I am sure it happens alot more than people realize.
By C Law (346), Water Mill on Oct 14, 09 1:43 PM
As a resident of Quogue, I am saddened that we are going to lose a Mayor who was fair and just with no personal agenda except that which was best for the village. For those who understand the way this place can work, he will be sorely missed. Best of luck to you, George, and many thanks for helping us forget about the prior Mayor.
By quogue (12), southampton on Oct 14, 09 2:12 PM
2 members liked this comment
That's the first bad word I've ever heard about Thelma Georgeson.

By Frank Wheeler (1815), Northampton on Oct 14, 09 2:38 PM
Thanks for the update on how everyone is related, and how they are getting paid and by who (read: taxpayer dollars). The hypocricy of those who benefit directly from fraud (yes, gasp! monetarily!) and then stand by their "fallen" family members never ceases to amaze me. A simple resolution for all of those "mea culpas" is for all to give back the money that "they" - YES - AS A FAMILY - benefitted from. Shaming isn't working, evidently, since we continue to the pay the price. I work for my ...more
By Board Watcher (532), East Hampton on Oct 14, 09 10:40 PM
Another crooked politician ! Throw the book at him and make his wife resign too !
By PrivateerMatt (390), Weesuck Creek , EQ on Oct 15, 09 10:27 AM
Now it's a Quogue politico involved in fraud. First it was the East Hampton hanky-panky scheme, then George Guildi was indicted for doing the mortgage-mombo and finally Linda Kabot and the Republicans of Southampton got caught playing the teaberry shuffle with taxpayer money! When will it end??? THIS NOVEMBER FOLKS! It's time to put the honest people in charge of our local governments and get rid of the bums whose only concern was re-election and personal gain. WAKE UP SOUTHAMPTON...before it is ...more
By Dodger (161), Southampton Village on Oct 16, 09 10:55 AM
George Motz's actions as CEO and Presidentn of MFA have no relation what so ever to his role as Mayor of Quogue. By no means is he a "crooked politician". I also don't believe it is fair to bring his wife and son into the mix because they are paid with taxes. Sit in Judge Motz's courtroom for 15 min and you will quickly understand that getting rid of her would be a true shame.

I am truly saddened by this whole situation and by no means condemn Mr. Motz's actions. However I wish the Motz ...more
By frmreastendr (7), Rochester on Oct 23, 09 10:20 AM
quogue: Stole money from senior citizens. Shame.
By OTISFORDSUCKS (34), Quogue on May 15, 10 8:55 AM
frmreastendr: "By no means is he a crooked politician". Really? Eh, he did plead "GUILTY".
By OTISFORDSUCKS (34), Quogue on May 15, 10 6:39 PM
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