Lawsuit slams former chief of Baraban Securities.

It alleges he looted assets of brokerage in bankruptcy

The former parent company of Long Beach brokerage firm Baraban Securities Inc. has sued the past president of BSI for $3 million in damages, alleging that he looted the assets of the local brokerage.

The suit alleges that Daniel C. Montano, now president of Montano Securities in the city of Orange, is not entitled to money from the sale of Baraban to a local investment group in October 1992 because he damaged the financial health of the brokerage while president from late 1991 to August 1992.

Baraban Taylor Group was the parent and sole stockholder for Baraban Securities, a brokerage firm with more than 1,100 investment executives and eight offices in California. Baraban's business consists of a small corps of full-time brokers and a much larger group of part-time brokers. A sister corporation called Learn & Earn operates a training school for brokers.

BTG filed Chapter 11 bankruptcy in 1991, but neither Baraban nor Learn & Earn were debtors in the case. In late 1991, Montano was hired as president to keep the two businesses on sound financial footing.

However, the suit, filed in U.S. Bankruptcy Court for the Central District of California on Feb. 22, charges Montano and his associate, Mark A. Voorhis, whom he named chief financial officer, with "looting the businesses of BSI and L&E, usurping and diverting for themselves the valuable relationships BSI enjoyed with its brokers ... and trade secrets ... injuring and ultimately destroying the businesses of BSI and L&E so they might divert and obtain those businesses at no cost. ..."

The case was filed by Baraban trustee James A. Feder, a Century City attorney. A hearing in the case is set for April 20.

In an interview, Montano said he disputed the suit's claims, calling it an attempt by the trustee to deny him the money he is owed.

Montano has pending claims in bankruptcy court requesting $300,000 of the proceeds from the October 1992 sale of Baraban and Learn & Earn to two Southern California investment veterans.

"The deal was, if I saved Baraban, I'd get half of the company. Now he's saying I hired my kids; he's trying to deny me my money so I don't get half," said Montano. "We turned them from a loss to a profit in four months. My job was to save the company. I saved it."

Specifically, the suit alleges Montano hired "various unqualified friends and family members ... at great expense to BSI."

The suit alleges those hired include Montano's daughter, Ann Marie, and her fiancee, in addition to his 24-year-old daughter Amy and her 24-year-old husband. He also hired his 21-year-old son, Alex, to head up Baraban's research department.

The suit also alleges Montano directed Baraban to enter into transactions and buy company supplies from Montano's relatives and business associates.

Montano was fired by the trustee, Feder, in August 1992, after Montano allegedly directed a Baraban employee to make a $375,000 loan to another company where Montano is a partner.

In addition, the suit alleges Montano attempted to steal Baraban's trade secrets. It also charges that in August, Montano started placing newspaper advertisements which were identical to those developed more than 10 years ago at Baraban.

However, Montano -- who said he has been in the brokerage business for 25 years and never got into trouble until he started dealing with "Century City bankruptcy lawyers" -- said the suit is designed to create "false rumors" about him.

Montano currently advertises his fiscal wares on cable television during two separate programs on Los Angeles' business channel, KWHY-TV, Channel 22.

Now, Baraban is owned by different people who claim they have the local brokerage firm on the right track.

Stuart S. Greenberg, a Wall Street veteran, and Robert Wilson, a real estate executive, joined forces to create Baraban Holdings Corp. in Los Angeles and in October 1992 purchased Baraban Securities.

While the company will continue training and supporting its stock brokers, it hopes to expand into the financial advisory arena, offering such services as pensions and mutual funds, according to Greenberg. The company plans to open two new offices in the next few months.

"The fact that Baraban Securities has a solid name and an established track record among investors and the securities industry here in California," was one of the announced reasons for the purchase of Baraban, said Greenberg in a release.