How Pressler could have gotten involved--as a Director, no less--with a guy named Ross Mandell and his company Sky Capital is a symptom of more than just bad judgement. It's plain stupidity. Mandell last Spring was sentenced to 12 years in federal prison for securities fraud. A long story about this just came out in Buzzfeed, but here's my take on the whole thing--and remember that this comes from the perspective of a long time securities trader and broker (see my bio on the right for a recap):
1) Mandell and his brokerage firm were known to me and everybody else in the trade as a pack of scoundrels decades ago, when they were kicked off the New York Stock Exchange. That occurred back in 1995. Mandell blamed it all on substance abuse, a not untypical dodge for low-character individuals who also happen to snort cocaine. The formal reason for his suspension? Unauthorized trades. From my floor trading background at the Chicago Board Options Exchange I'd guess that he was putting in trades for customers--generating hefty commissions as a result--without telling the customers about them. This is scumminess de la scumminess in that business, mainly because it's usually perpetrated on the "widows and orphans" class of customers who have money, don't know how to manage it, and entrust it to smooth talkers like Mandell and his ilk.
2) Resurfacing in '02, Sky Capital went public on the London Alternative Investment Market. AIM definitely has its place as a venue for start-up, low-capitalized firms to search out investors willing to take hefty risks on unknown but promising ventures. By its nature, AIM has fewer rules and easier financial requirements than its stodgier big brother, The London Stock Exchange. That Mandell found good reason to migrate to the loosely-regulated AIM after his bad reputation got around in New York makes sense. That his firm stopped trading after 4 years is no surprise. That his fraudulent activities on AIM are among the charges that recently got him busted and convicted seems consistent with the rest of his "career."
3) What makes no sense to me is how Larry Pressler, given Mandell and Sky Capital's long history of financial debauchery, could have chosen to sit on the board of Sky Capital from 2004-2006. I mean, it was pretty clearly established by that point that Mandell was a scoundrel, if not by the criminal justice system certainly by the word-around-the-street court of professional opinion. Pressler even knew about Mandell's history when he joined the board, but rather lamely tells Buzzfeed that he thought Mandell "was a changed man." In '05, Pressler told Forbes (which characterized Pressler as not just a board member, but as an advisor--and not just as an advisor, but as one of Mandell's "closest advisors") that even though Mandell had had his troubles in the '90s, he "believes in second chances" and that Mandell was "honest and good." Pressler, like so many other of Mandell's victims, got conned.
I admire Pressler's trusting nature, but certainly have to condemn his judgement, not just of Mandell but of how his association with Mandell could create such a serious public relations problem for a high-visibility person like himself. On balance, Pressler is the sap that Mandell thought he was. Pressler's decision to identify with Sky Capital was stupid from its inception.