Former Salomon Bond Trader Indicted

NEW YORK - Paul Mozer, a key figure in the Salomon Brothers Treasury bond scandal, was charged with securities fraud and related offenses after a plea agreement involving less serious charges fell apart.

A federal grand jury yesterday indicted Mozer on one count of securities fraud, two counts of false statements and one count of causing a broker-dealer to keep false booking records, said John Auchincloss, an assistant U.S. attorney in Manhattan.

Mozer, 37, was the head of the brokerage's government bond trading desk until he was fired in August 1991. Salomon Brothers has admitted to improper bidding at several Treasury bond auctions between 1989 and 1991.

The indictment accused Mozer of "falsely and fraudulently" identifying two Salomon customers - Warburg Asset Management and the Quantum Fund - as bidders for $6.3 billion in five-year Treasury notes on Feb. 21, 1991. Salomon was the true bidder, the indictment charges.

Mozer also allegedly made false statements to government regulators in an attempt to conceal his actions and kept false books and records.

If convicted, he could face a maximum sentence of up to 10 years in prison and a $1 million fine on the most serious charges.

That's more severe than the punishment envisioned under a plea bargain agreement between Mozer and federal prosecutors that collapsed during a court hearing Monday.

Under that deal, Mozer agreed to plead guilty to two counts of making false statements to the government.

He would have faced a maximum 10 years in prison after agreeing to pay $500,000 into a special government fund. But it was not likely Mozer would have served the maximum term because of his cooperation with government investigators.