After he was fired in August as president of Raleigh-based Law Enforcement Associates Corp., Paul Feldman claimed other shareholders might have engaged in stock manipulation and insider trading. But during the highest price spike in the company’s history, he did better than some of those he accuses. In a complaint to the U.S. Department of Labor in November, Feldman says about 50 North Carolina politicians — “including former and present governors” — bought large amounts of stock in LEA, a maker of surveillance equipment, in 2004 and 2005, possibly based upon inside information from Tony Rand. Then an LEA director and now its chairman, Rand was state Senate majority leader before stepping down Jan. 1 to head the parole board. Gov. Beverly Perdue bought about $1,000 of LEA stock in 2002 and never sold it, Perdue spokeswoman Chrissy Pearson says. Feldman, who had been president eight years, was let go for poor performance and insubordination, according to the company.
Feldman also contends that Rand told former LEA sales director Martin Perry last August that, based on inside information from “Frank Holding (president of First Citizens Bank and a personal friend of Rand),” he “had bought the bank’s stock at $60 per share and sold it at over $700 per share.” Rand planned to do the same with LEA stock, Feldman says. Rand denies it, saying he wanted to buy out small LEA shareholders to reduce the total to fewer than 300 — as Columbia, S.C.-based First Citizens Bancorporation Inc. did four years ago — so LEA wouldn’t have to comply with Sarbanes-Oxley rules. “We figured we’d save $200,000 to $300,000 a year,” he says. Frank B. Holding is vice chairman of the South Carolina bank and executive vice chairman of Raleigh-based First Citizens BancShares Inc. Spokeswomen at both banks say Feldman’s allegations are “unfounded.”
For most of the nearly six years LEA has been publicly traded, shares rarely have sold for more than $2. In late 2004, the stock started rising after the company announced it was developing a line of stun guns. For three days in January 2005, it traded in double digits. But within three weeks, it fell below $6.50 for good. At the end of 2009, it traded at 12 cents a share. Rand says he sold about $200,000 worth during the bubble — legally. “No. 1, the information we had was widely public, and No. 2, I never did give anybody inside information under any circumstances.” SEC filings show Feldman, who did not respond to requests for an interview, grossed nearly $700,000 during the stock’s three-day run in double digits and more than $900,000 in less than a week — well above his $134,940 salary in 2005.