THE CON: As a broker, Walter Tellier peddled penny stock, highly speculative shares worth less than a dollar. The only hitch: he lied about the worth of penny stock to drive the prices up and then sold his own shares for profit.
THE DAMAGE: $20 million, or about $147 million today.
THE OUTCOME: Altogether, Tellier’s various frauds came to more than $20 million. Tellier was sentenced to 4 ½ years in prison.
In the early 1950s, Walter Tellier was the king of the so-called penny stock, highly speculative shares that cost less than a dollar at initial offering. Tellier & Co., his New Jersey-based brokerage firm, targeted people on a limited budget eager to invest in what he called the “best buy in 20 years.” With his manipulative and aggressive sales approach, Tellier ran the largest over-the-counter security selling organization in the U.S.
In the first half of the decade, more than 50,000 people bought shares in Consolidated Uranium Mines, Inc. Hooked by the price of each share (just one cent) and the promise of huge profits, these inexperienced investors expected their stock to shoot up to $20 a share. They believed they what radio and television ads for Tellier & Co. called a “ground-floor opportunity” – after all, $1 million worth of uranium ore had been discovered on just one of the thousands of acres that Consolidated controlled.
In truth, the Utah firm didn’t even own the big ore field that Tellier and his sales team talked up. The net worth of Consolidated was $1 million – not $85 million. In 1956, Time magazine reported the president of Consolidated complained repeatedly to Tellier about the “exaggerated statements” in his sales pitch. The Penny Stock King didn’t change his ways.
Tellier also didn’t waver when called to testify at a Congressional inquiry in 1955. He railed against the “phonies” who accused him of fraud, firing back that they were plotting to ruin America's production of uranium. Anyone who would bring false charges against him “must be a little pink or something,” said Tellier. The Securities and Exchange Commission was another target of his scorn; as the subject of a recent investigation, he felt qualified to describe the commission as “100 percent overstaffed.”
But those SEC investigators that Tellier resented found cause for concern. Within weeks of his testimony before Congress, Tellier and five associates were indicted for selling 1,400 people as much as $1 million in unsecured bonds in the Alaska Telephone Co., which soon declared bankruptcy. Six months later, Tellier was slapped with a fresh indictment, this time for manipulating stock prices and swindling Consolidated shareholders out of $15 million. A third and final charge of mail fraud and conspiracy rounded out the case against Tellier. He was sentenced to four-and-a-half years in prison.