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Alan Brian Bond had it all. He lived an opulent lifestyle that included shopping sprees at Saks Fifth Avenue, sprawling homes in New Jersey and Florida, and a fleet of 75 luxury and antique cars, But these days, home is a cell located in rural New Jersey. Bond made his name managing more than $600 million in public and private pension funds and by appearing regularly on PBS' Wall Street Week with Louis Rukeyser. But that all came crashing down after prosecutors swooped in, seized his assets, and convicted Bond of numerous securities violations.

Bond's story is one of a financial Icarus who played fast and loose with the rules and flew too close to the sun. This son of a schoolteacher graduated with a bachelor's degree in economics from Dartmouth and an M.B.A. from Harvard. He learned the ropes at one of Wall Street's top firms, Goldman Sachs, but was accused of inflating his expense account and was fired in 1989, according to testimony at his trial. Two years later, he partnered with John and Ernesta Procope, owners of E.G. Bowman Co., one of the nation's largest black-owned insurance companies, to form Bond, Procope Capital Management. With this move, Bond transformed himself into one of Wall Street's all-stars.

But according to prosecutors, Bond conspired with a broker to inflate the fees of his clients' stock transactions in exchange for keeping part of the proceeds from a kickback scheme that totaled nearly $7 million from 1993 to 1998. The Securities and Exchange Commission claimed Bond and broker Robert Spruill defrauded Bond's clients by charging extra for over-the-counter stock trades and pocketing the money. The proceeds of this scheme were used to fund Bond's lavish lifestyle.

After the Procopes terminated their partnership with Bond, he relaunched the firm as Albiond Capital Management. (Ernesta Procope had no comment.) Despite pleading guilty to the charge, Bond's firm continued to manage some $600 million for about 25 clients, including the National Basketball Association, City University of New York, and the Washington Metropolitan Transit Authority.

To make matters worse, prosecutors charged that while out on ball and facing securities violations in 2000, Bond masterminded a "cherry-picking" scheme to pay for his high-priced legal team. Authorities said Bond illegally allocated profitable trades to his own personal account and steered the vast majority of unprofitable trades into clients' accounts. As a result, Bond's clients lost nearly $57 million, while Bond gained approximately $5.5 million, an investment return of more than 5,500%.

When prosecutors came after Bond. his assets were frozen and his firm shut down. The former highflier was forced to rely on the services of a public defender. His bail, backed by a mortgage on his parents' home, was yanked after the second charge, and U.S. District Court Judge Leonard B. Sand ordered Bond to be detained pending a sentencing hearing. On Oct. 11, 2002, Bond pleaded guilty to 10 counts including conspiracy, investment advisory fraud, and filing a false tax return. Facing a maximum of 45 years, Bond was sentenced to 12 years and seven months in early 2003. (Correspondence to the Fort Dix, New Jersey, federal correctional facility requesting to interview Bond was unsuccessful, and calls to Bond's wife, Sheila, were not returned.)

Bond is one of several African American Wall Street stars who have fallen from grace. Many represent a who's who from the BE 100S and have been indicted and, in some cases, convicted of charges ranging from investment advisory fraud to money laundering. For example, Raymond McClendon of Pryor, McClendon. Counts & Co. Inc.--a former BE 100s company--and former city of Atlanta investment officer Theresa A. Stanford were convicted on charges that the two ran a scheme to cheat the city of Atlanta out of $15.3 million in investment profits between 1992 and 1994. McClendon was convicted in 2000 and sentenced to a six-year, eight-month prison term as well as levied a $1.5 million fine. Stanford was sentenced to a three-year, 10-month prison term and ordered to pay $120,000 in restitution to the city of Atlanta. Others who have come under scrutiny include former power brokers like Kevin Ingram, a celebrated trader who made BLACK ENTERPRISE's "Top 25 Blacks on Wall Street" in 1996 and was convicted and served time for money laundering several years later, and Nathan A. Chapman Jr., currently on trial, who recently stood before a judge answering tax and investment-advisory fraud allegations.

A few were cleared of criminal charges but still paid a high price. For instance, San Francisco financier Calvin Grigsby, former CEO of Grigsby, Brandford & Co. and another alum of BE's 1996 ranking of Wall Street players, was charged with bribery and using his bond business to steal more than $1 million in public funds to finance everything from political contributions to expensive cars and Super Bowl tickets. In 1999, a federal judge in Miami threw out the embezzlement charges, but the damage of the trial and declining business compelled Grigsby to shut down his investment bank. Grigsby was cleared of all charges.

And in one of the most publicized cases in the last decade, Joseph Jett was cleared of charges by the SEC that he made phantom trades. But he was sanctioned for bookkeeping violations and barred from securities trading.

There's no doubt that the federal authorities have turned up the heat throughout the financial community. In 2003, there were 679 cases filed by the SEC against individuals or firms for securities violations, up 13.5% from 2002. This increased scrutiny is primarily a result of a string of corporate misdeeds that began with Enron in 2002 and worked its way through the nation's largest mega-corporations. And although nearly all the white-collar crimes allegedly committed by African American suspects pale in comparison to those reportedly committed by Enron's Kenneth Lay or ex-WorldCom CEO Bernie Ebbers. the entire black financial community feels the heat.

According to Marquette Chester, chairman of the National Association of Securities Professionals, the actions of a few can have an unfair impact on the entire black investment community. "I think that the investment community, regardless of race or color, is an industry where trust and integrity and ethics play a large role, so whenever one of our fellow colleagues is involved in a situation where that trust has been violated, it does have a ripple effect on all of us," Chester asserts. "So there's a little bit of a concern about all of us being tossed into the same pot, and people who probably are reluctant to encourage diversity and inclusion using it as an excuse for something they didn't want to do in the first place."

The real victims, however, are investors who have lost their hard-earned money. In many cases, it is virtually impossible for individuals, institutions, and enforcement officials to detect these complicated scams committed by insiders. Just take a look at how Alan Bond bilked millions from unsuspecting customers. In Bond's cherry-picking scheme, he developed a highly sophisticated operation. He typically waited until late in the trading day, or until after the securities markets closed, to tell his broker-dealer which accounts to direct trades. By delaying his instructions. Bond was able to determine whether his trades were profitable or unprofitable. The SEC complaint alleged that he directed 17% of his unprofitable trades to his own account, while directing 83% of the unprofitable trades to his clients' accounts.

Such swindles have taken a human toll. In an unrelated case, Roy Grace, a 50-year old widower, alleges that one money manager cheated him out of $100,000 from his deceased wife's insurance policy. He was investing the money to secure his children's future. Laments Grace: "First of all, the experience of losing my wife, and then ... I trust another African American who seems legit. He gave me all these references. Everything seemed legitimate on the surface, and I want to do what I can in the black environment, and then when this happened--it was devastating."

BE spent more than a year reviewing court transcripts and interviewing Wall Street insiders, prosecutors, and individuals like Grace. On the following pages, we provide you with an in-depth look at these fallen stars, detailing their use of complicated transactions to gain wealth and power as well as their eventual downfall.

NATHAN A. CHAPMAN: FALL OF A POWER BROKER