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.
Assistant Business Editor Alan M. Wolf joined the N&O in 1999 covering the business of health care. He became an editor in 2001, and helps oversee the paper's daily business coverage and Sunday Work&Money section. He lives in Clayton with his wife and two children. Reach him at 919-829-4572 or 
Comments
Rand Charges
Wed, 12/02/2009 - 19:50 — prisonerLet's not rush to judgment without ALL of the facts.
Tony Rand
Wed, 12/02/2009 - 19:01 — prison1I stated in an earlier post that he was a crook, when he announced he was giving up his Senate seat. He should not be allowed the position in the Department of Correction. He would not even make a good convict. But he can always use some of his kick back money from Blue Cross and Blue Sheild to get out of this if the stock does not go up enough to cover his legal cost. Was never a State employee's freind. Mabe he will get tried, found guilty, and go to prison like Jim Black and his other friends. CROOK !!!!!!!!!!!!!!!!!!!!!!!!!!
probably very true with a person like Rand
Wed, 12/02/2009 - 17:54 — tboard47probably very true with a person like Rand another crooked lawyer they are as numerous as Kudzu and I like the analogy " an invasive weed"
A Member of the General Assembly Dishonest?
Wed, 12/02/2009 - 15:11 — DukeUniversityI believe the allegations. The General Assembly will not let the State Auditors audit their dealings. They believe they are capable of handling it themselves. With such a proven track record, I understand why the legislators do not want anyone looking into their doings. This is the same group that will not sacrifice their air-conditioned and heated open garage as a gesture of cutting wasteful spending. In fact at one point, they had money in this past year's budget to have it upgraded. Now, how would any of these demigods do anything dishonest?
It is so common for
Wed, 12/02/2009 - 15:02 — calypsomanIt is so common for employers, and politicians, to say people are disgruntled employees when charges are made the said employer. That is a common tactic by these people howver true the charges might be.
I think politicians with very few exceptions are slimes. They are however necessary evils. If someone accuses a politician of something I tend to believe it because we have so many examples of these lawmakers who are so corrupted and dishonest and mislead the public. they say they are sorry ONLY when they are caught "with their pants down", so to speak.
Tony Rand a Crook????
Wed, 12/02/2009 - 12:43 — sweetseaNaw, not ol Tony. He is as pure as the driven snow and the lack of an investigation into the activities of Easley and Edward's cohorts by the new democrat US Attorney will bear this out. I know Rand feels better knowing that George Holding will be taken off the case of Easley/Edwards. That gets him off the potential hooks as well. Carry on boys. There is a new sheriff(Atty. Walker) in town.
I'm so glad...
Wed, 12/02/2009 - 12:20 — ThoughtCrimesthat our dear leader, Obama the Incorruptible is taking every step possible to remove the US attorney that is prosecuting this corrupt politician.
Hopefully sending a strong message that crime pays, if you are a powerful, connected democrat.
Obama would not comment.... as he hasn't held a press conference in months.
We elected a community organizer for president and all we got was TOTUS.
Prosecuted??
Wed, 12/02/2009 - 12:45 — martinnhmDid it say that somebody is being prosecuted?
And I missed the part where
Wed, 12/02/2009 - 15:59 — jayhurstAnd I missed the part where Mr. Obama was doing anything to replace USA Holding, save making the nomination for his own USA. "Everything possible" is a wildly inaccurate phrasing.
Just ask the Obama yourself
Wed, 12/02/2009 - 18:52 — ThoughtCrimesOr have a reporter ask him for you.
Oh wait! That's right. Mr 'Open and transparent' hasn't had a press conference or answered reporters questions since he opened his fat mouth and put his even bigger feet in, calling the cambridge cops racist pigs.
Yay Jayhurst! Your side won! Woooooo! Hold your breath for the change part! :-P