B-School Student Indicted

A Business School student was indicted by a New York grand jury and fined $500,000 by the Federal Reserve on Monday for his role in an alleged conspiracy to profit at the expense of a trust company.

While working as a vice president and senior trader for Manufacturers Hanover Trust Company in 1990, Daniel K. Young, 29, induced the company to sell him and a private investor the bank's stake in a $1 billion debt instrument of the Republic of Columbia, the New York County District Attorney and the Fed charged.

Young, a second-year student scheduled to graduate this spring, and George Liberatore, the private investor, bought the instrument because they knew the debt was about to be restructured, the indictment said.

If convicted on all charges of conspiracy, accepting a bribe and violation of banking laws, Young could serve up to four years in prison, according to Gerald McKelvey, special assistant to the New York district attorney.

The Fed has scheduled a hearing for July 13 before its Office of Financial Institution Adjudication to decide whether Young should be permanently barred from banking.

A statement released by the Fed charged that the Business School student's actions "demonstrate a willful or continuing disregard for the safety and soundness of [Manufacturers] by Young, involve a reckless disregard for the law, and personal dishonesty by Young."

Young did not return phone calls placed yesterday to the address in Commack, N.Y., provided by the New York district attorney. His New York lawyer was out of his office yesterday and could not be reached for comment. Young's phone number at the Business School has been disconnected, and no one answered the door in his Morris Hall room yesterday or Monday night.

The indictment means that Young is unlikely to receive his degree this spring. In an interview yesterday, Senior Associate Dean for Educational Programs Thomas R. Piper said the Business School would not make a decision on whether to grant Young a diploma until after all legal proceedings are complete.

"Until the legal proceedings are resolved we will not be in a position on whether to award him a degree," Piper said. "We, of course, take any sort of misconduct extremely seriously, but we also believe due process is important."

At Manufacturers, Young worked in the trust's emerging markets debt unit, where he was in position to invest and trade debts of foreign governments.

The 12-page indictment depicts Young as the person who initiated the alleged conspiracy.

The indictment also quotes alleged conversations in November and December of 1990 between Young and Liberatore, who were then business partners, in which they discuss how to convince a Manufacturers trader to sell Liberatore the Colombian debt instrument. Manufacturers eventually sold the instrument to Liberatore at 67.5 percent of its face value.

And in March 1991, Young helped set up a company, Y & A Holdings Inc., "as a vehicle for Daniel Young and others to profit from the Colombian asset and other [less developed country] debt."

In a news release, New York District Attorney Robert M. Morgenthau said that Young and Liberatore earned more than $500,000 from the arrangement. If Manufacturers had held the Colombia debt instrument, it would have made $1 million.

It was the second time this year that a Business School affiliate has been ensnared by their financial past. Visiting Professor of Business Administration Marc J. Epstein was sued in Middlesex County Court in March by a bank attempting to recover a loan he defaulted on while heading up two California investment companies. Epstein, who will remain at the school next year, now must pay the bank $13,000 a year in equal monthly installments, according to a court settlement

The 12-page indictment depicts Young as the person who initiated the alleged conspiracy.

The indictment also quotes alleged conversations in November and December of 1990 between Young and Liberatore, who were then business partners, in which they discuss how to convince a Manufacturers trader to sell Liberatore the Colombian debt instrument. Manufacturers eventually sold the instrument to Liberatore at 67.5 percent of its face value.

And in March 1991, Young helped set up a company, Y & A Holdings Inc., "as a vehicle for Daniel Young and others to profit from the Colombian asset and other [less developed country] debt."

In a news release, New York District Attorney Robert M. Morgenthau said that Young and Liberatore earned more than $500,000 from the arrangement. If Manufacturers had held the Colombia debt instrument, it would have made $1 million.

It was the second time this year that a Business School affiliate has been ensnared by their financial past. Visiting Professor of Business Administration Marc J. Epstein was sued in Middlesex County Court in March by a bank attempting to recover a loan he defaulted on while heading up two California investment companies. Epstein, who will remain at the school next year, now must pay the bank $13,000 a year in equal monthly installments, according to a court settlement