Wall Street Felon known as “Abba Dabba Do’ Reemerges As “Cure’ Gays Guru
A Truth Wins Out (TWO) and South Florida Gay News (SFGN) investigation revealed today that a Wall Street criminal mastermind who was convicted in 1987 of “fraud of spectacular scope” has secretly reinvented himself as a moral leader who “cures” gay and lesbian people. Known as “Abba Dabba Do” in the financial world, Arthur Abba Goldberg was sentenced to 18 months in jail for bilking poor communities with complicated bond schemes and served six months in prison.
“We have long considered Arthur Goldberg a con-artist, but our investigation shows he is also an ex-con,” said Wayne Besen, Executive Director of Truth Wins Out. “His diabolical past mirrors his dishonest present-day work with the ex-gay industry. Whether it was shady deals on Wall Street or shading the truth on gay issues, Goldberg is someone who lacks credibility and can’t be trusted.”
“Mr. Goldberg’ silence today about his illegal conduct yesterday is a clear indicator that 18 months in prison 20 years ago has not inhibited his willingness to deceive others in order to advance himself today,” said SFGN Publisher Norm Kent. “You free yourself by admitting your wrongs, not erasing them. Goldberg is hardly in a position to be advocating how gay men and women should be authentic with their own lives when he is a fraud with his.”
Upon completing his parole, Goldberg dropped his conspicuous middle name, Abba, and co-founded Jews Offering New Alternatives to Homosexuality (JONAH) in 1999. He is currently the president of Positive Alternatives to Homosexuality (PATH), an umbrella group for “ex-gay” referrals and the Executive Secretary of the notorious National Association for Research and Therapy of Homosexuality (NARTH). He is also the President of Congregation Mount Sinai, a temple in Jersey City and a Principal for the International Center for Gender Affirming Processes (CGAP). Goldberg is a key ex-gay industry insider and viewed as an architect of its strategy and message machine, says TWO and SFGN.
In 1989, Goldberg plead guilty in federal court in California and Illinois to three counts of wire and mail fraud, and conspiracy to defraud the United States. The accusations he admitted to include his participation as the engineer of a phony bond and investment scheme, which netted his Wall Street investment firm nearly $11 million in illegal fees.
The U.S. Attorney who handled the case at the time, K. William O’Connor, told the court at his sentencing that Goldberg’ crime was “a fraud of spectacular scope.”
The SEC banned Goldberg and his firm from ever selling securities again. In addition to his prison term, Goldberg was disbarred in both New Jersey and Connecticut. Despite that, he lists himself as a Doctor of Laws today on the website of NARTH.
Additionally, Goldberg is the author of “Light in the Closet” (Red Heifer Press), which promises to “explode the gay gene mystique, offering hope, compassion, direction and vitally needed information to gay strugglers, their families, friends, and surrounding community.” JONAH also plays a key role in supplying clients for Journey into Manhood Weekend, an ex-gay boot camp, where participants are taken deep into the woods to supposedly discover their masculinity. Goldberg is not gay, but has an openly gay son who reportedly lives in the New York City area.
“We conducted an investigation into Goldberg’ dark history to shine a little light in his own closet; to tell the world the truth about who Goldberg really is, and how he has never owned up to his sordid and tawdry past.”
Although Goldberg (in The Record 1989) often claims that he has been deeply involved in civil rights issues, his case revealed a deep insensitivity to minorities. An October 1, 1989 story in the Philadelphia Inquirer reveals that Goldberg jokingly described a bond issue the firm had underwritten in Guam as “selling bonds to the cannibals.” He also sought out poor minority communities, such as East Saint Louis, as targets for his conspiracies.
“Simply by concealing his middle name and omitting his dirty deeds from his biography, Goldberg was able to mask his past as a mini-Madoff,” said Besen. “The real Arthur Abba Goldberg is an unsavory character who lacks the credibility and integrity to portray himself as an expert on gay and lesbian issues.”
In an interview, one of Goldberg’ former clients suggests that his past moral deficiencies are reflected in his current work. He says that Goldberg is manipulative and exploits those who are despondent and desperate to conform, so they can fit in and be accepted by their friends and family members.
“Arthur Goldberg takes advantage of the vulnerability of religious Jews by promising them the opportunity to heal from their homosexuality and be able to live a life within the community they grew up in and fulfill the expectations they had of themselves and of their families,” the former client told TWO and SFGN. “When speaking to Arthur Goldberg, he uses false statistics of changing hundreds and thousands of men and women and other such numbers as an 80% success rate, which is misleading and false.”
Based in Fort Lauderdale, South Florida Gay News is the premier information source for the region’ gay, lesbian, bisexual and transgender community.
(Research team: Wayne Besen, Norm Kent, Michael Hamar, Jerry Wong)
Watch Goldberg on The Montel Williams Show (5:55 mark)
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Arthur Goldberg speaks at Americans For Truth About Homosexuality Banquet
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BOND-FRAUD SCANDAL’S LATEST CHAPTER: PRISON
Philadelphia Inquirer, The (PA) – Sunday, October 1, 1989
Author: Howard Goodman, Inquirer Staff Writer, Inquirer staff writer Barbara Demick contributed to this article.
To Moshe Lichtman, a developer who tried in 1986 to bring a major trash resource-recovery plant to the ailing city of Chester, the attitude of Matthews & Wright Inc.’s municipal-bond chief Arthur Abba Goldberg was best expressed when Goldberg jokingly described a bond issue the firm had underwritten in Guam as “selling bonds to the cannibals.”
“Lichtman thought this to be ironic,” reads a recently released FBI report, “because Goldberg had food dripping out of his mouth when he said it.” ‚Ä®‚Ä®Exploitation, racism and gluttony – the themes surge through the evidence amassed by prosecutors in the Goldberg case, which came to its probable end on Monday with the one-time Wall Street wunderkind sentenced to 18 months in federal prison and ordered to pay $400,000 in fines and restitution.
The sentence, by U.S. District Judge Jesse W. Curtis Jr. in Los Angeles, came two months after Goldberg pleaded guilty to three counts of mail fraud for playing the key role in a bond-fraud scandal that rocked the financial industry when it came to light in 1987. ‚Ä®‚Ä®With a breathtaking appetite, the evidence shows, Goldberg lured some of America’s poorest communities into the municipal-bond business to make huge sums of money for his firm, never caring whether the trash plants or housing projects that the bonds were supposed to finance were ever actually built.
His firm, Matthews & Wright, issued hundreds of millions of dollars worth of bonds for the struggling, predominantly black communities of Chester and East St. Louis and East Chicago Heights, Ill.; the Sac and Fox Indian Reservation in Oklahoma, and the Pacific islands of Guam, Palau and the Commonwealth of the Northern Marianas.
From 1984 through August 1986, according to the evidence, Goldberg ordered that fraudulent studies be written to justify preposterously large bond issues for several of these communities. In 1985, he gave the then-governor of Guam $70,000 in “campaign contributions” to push through a $300 million bond issue there. After the bonds were issued, Matthews & Wright pocketed $10.5 million in fees while Guamanian developers tried vainly to get financing they expected for intended housing projects.
As if those profits were not enough, Goldberg then skimmed $57,000 from the Guam bonds’ development fund, writing ‚Ä®phony requisitions that sent the money to a Jersey City, N.J., credit union he founded and controlled. ‚Ä®‚Ä®Most daring of all, the evidence shows, Goldberg engineered a dizzying scheme to underwrite more than $2 billion in tax-free bonds with checks that had no money behind them – in a nearly successful attempt to beat Internal Revenue Service tax deadlines on Dec. 31, 1985, and Aug. 31, 1986, meant to halt suspicious bond issuances.
The bond deals brought Goldberg and an associate, Frederick L. Mann, more than $11 million in profits, according to prosecutors. ‚Ä®‚Ä®But the communities, their hopes raised by Matthews & Wright’s promise of riches, saw none of the huge projects built – although in Chester, at least, officials insist their dreamed-of $335 million trash plant will yet be realized. Across the country, the scandal hurt localities’ credit ratings, cut into the value of bondholders’ investments and cost the U.S. Treasury millions in lost taxes. ‚Ä®‚Ä®The Inquirer uncovered the Matthews & Wright phony-check scheme in a series of articles in 1987 that helped draw investigators’ attention to the case. By December of that year, a federal grand jury on Guam indicted Goldberg and Mann on 52 counts of bribery, fraud, conspiracy and other charges. ‚Ä®‚Ä®Mann, a Canadian citizen, is fighting extradition to the United States. ‚Ä®‚Ä®Before the scandal broke, Goldberg , 49, was known on Wall Street as ” Abba Dabba Do” and ” Abba Cadabra” for his skill in turning the small Matthews & Wright company into a municipal-bond powerhouse.
A lawyer and a former deputy attorney general of New Jersey, he had built a reputation as a humanitarian who had worked hard to help Soviet Jewish emigres. The Jersey City credit union, for example, was supposed to be for emigres’ benefit. ‚Ä®‚Ä®But grand jury testimony and FBI reports show a different side of the man. ”An examination of his conduct,” said K. William O’Connor, U.S. attorney for Guam, “will not reveal a single instance where he hesitated to lie or cheat or cover up to achieve his aim. . . . His greed has caused incalculable harm.”
In anticipation of Goldberg ‘s sentencing, O’Connor submitted more than 900 pages of prosecutors’ evidence – grand jury testimony, FBI reports, financial records and bond documents – to the U.S. District Court in Los Angeles, making public more details about the scandal than had been available before. ‚Ä®‚Ä®They show that Matthews & Wright was far from honest when its officials insisted, as they did to reporters and bondholders when the story was breaking, that the company did nothing wrong. As a spokesman said in 1987, ”Matthews & Wright believes that they have helped and done great work for these areas, and will continue to do it.”
The truth was that the company viewed “these areas” as unsophisticated backwaters whose power to issue municipal bonds could be easily exploited for profit. And the bigger the bond issue, the bigger the underwriters’ take. ‚Ä®‚Ä®Goldberg said as much to John Zaccaro, a Matthews & Wright employee ordered to work on the Guam bond issue. Zaccaro quoted Goldberg ‘s words to the grand jury: ” ‘I don’t give a s- if the housing ever gets built,’ ” Zaccaro testified Goldberg told him. “Excuse my – that’s an exact quote. ‘I just want to see this deal close.’ ” ‚Ä®‚Ä®The grand jury testimony reveals that Goldberg had unusual reasons for teaming up with Mann, a globe-trotting businessman who had been convicted of fraud in 1984 for bilking a dying widow of $65,000 she had entrusted to his care. According to Zaccaro and Richard Massey, another former Matthews & Wright employee who testified before the grand jury, what was especially useful about Mann was his Canadian citizenship.
“And as a Canadian citizen,” as Massey put it, “Canada did not have any laws against making payments to foreign officials.” ‚Ä®‚Ä®According to the testimony, Goldberg habitually took advantage of men who were economically dependent on him. ‚Ä®‚Ä®Zaccaro – no relation to Geraldine Ferraro’s husband – was a poor, young lawyer just out of law school, trying to support his wife and daughter by working chiefly as a security guard at a garbage dump, when Goldberg hired him at $15,000 a year.
He told the grand jury he was grateful for the job. ‚Ä®‚Ä®After two weeks on the job, Zaccaro was ordered to write a phony feasibility study to justify $80 million in housing bonds for the Northern Marianas that had already been issued. Another Matthews & Wright employee had previously calculated that the Marianas needed no more than $35 million worth of housing.
Goldberg told him “to make the numbers dance,” Zaccaro testified. Zaccaro did; he fixed the numbers to justify the $80 million issue. ‚Ä®‚Ä®Phillip Kieffer, the town manager for Secaucus, N.J., had borrowed $65,000 from Goldberg ‘s New American Federal Credit Union in Jersey City – most of it at Goldberg ‘s suggestion. While still in debt, Kieffer agreed when Goldberg asked him to write socioeconomic studies to justify the inflated Marianas and Guam bond issues. ‚Ä®‚Ä®Joel Schwartz, the New American Federal Credit Union manager, owed his job to Goldberg , who had hired him.
In late December 1985, Goldberg asked him to sign some bond documents as an officer of the Commercial Bank of the Americas, a bank he had never heard of. It was a shell bank, incorporated by Mann and two others in the Northern Mariana Islands with only $500,000 and operating out of a post office box. ‚Ä®‚Ä®On Dec. 31, Goldberg asked Schwartz to bring to Matthews & Wright’s Wall Street offices several packs of the credit union’s “starter checks” – blank checks without the customer’s name pre-printed. ‚Ä®‚Ä®Schwartz did as he was told. His signature proved central to Goldberg ‘s scheme of underwriting bonds without real money.
Schwartz told the grand jury: ”I felt as if I didn’t do this then, yes, I may have a problem with my job either now or down the road.” ‚Ä®‚Ä®Neither Zaccaro, Keiffer nor Schwartz has been charged in the case. ‚Ä®‚Ä®It was a dizzying scheme. Hundreds of millions of dollars worth of bonds were “paid for” in the starter checks from the credit union, where no money was backing them up. They were instantly signed over to the Commercial Bank of the Americas and just as instantly redeposited in the credit union. They thereby bypassed the banking system, assuring that no one would ever try to cash the worthless checks. ‚Ä®‚Ä®Later, after the IRS deadlines had passed, Matthews & Wright made money on the bonds by selling them to the public, claiming that the then-impermissible sales were allowable “remarketings.” ‚Ä®‚Ä®To a Congress and IRS already suspicious of the municipal-bond industry, Matthews & Wright’s behavior was the final straw. Regulations governing the issuance of tax-free bonds were tightened in 1985 and 1986, and it will probably be a long time before they loosen up. For poor municipalities like Chester, an important possible source of revenue has disappeared. ‚Ä®‚Ä®Goldberg is to report to federal marshals on Nov. 1 to begin his prison term.
He will be eligible for parole after six months. ‚Ä®‚Ä®Back in 1985, while Goldberg was pushing the inflated $300 million bond issue for Guam, others in the industry warned him that he was “killing the goose that laid the golden egg,” an FBI report says. ‚Ä®‚Ä®The goose is dead. And as Goldberg heads off for prison, that might be his most enduring legacy.
Edition: FINAL Section: EDITORIAL REVIEW & OPINION Page: C01 Index Terms: BRIBERY FRAUD FINANCE VIOLATION SENTENCE US GUAM PA ; NORTHERN MARIANA ISLANDS Record Number: 8903040351 Copyright (c) 1989 The Philadelphia Inquirer