The former executive and largest shareholder of the Manhattan Bagel chain who pleaded guilty in three separate criminal cases – including one in which he “cooked the books” to make the bagel chain appear to be more profitable – was sentenced today to 90 months in federal prison.
Allan Boren, 39, was sentenced by United States District Judge Gary Feess, who also ordered the defendant to pay more than $1.2 million in restitution to victims of his investor fraud scheme. At this morning’s sentencing hearing, Judge Feess increased Boren’s sentence after finding that the defendant’s conduct was “predatory in nature,” as well as “callous and despicable.”
In May 2002, Boren pleaded guilty to securities fraud and accounting fraud charges – as well as to obstructing an SEC investigation – in a corporate fraud case involving Manhattan Bagel. In that case, Boren admitted that he caused Manhattan Bagel to include bogus bagel sales in its financial statements filed with the SEC in 1995 and 1996. The false statements included claims that Manhattan Bagel for nearly a year was selling 6,000 bagels per week to a small Los Angeles law firm.
As a result of Boren’s misconduct, Boren, who was the largest shareholder at the time, made more than $28 million when he sold his shares of Manhattan Bagel stock during the accounting fraud and before the stock price dropped.
In this case, Boren also admitted to threatening witnesses, including his brother, in order to impede the SEC’s investigation into the accounting fraud. Judge Feess also increased Boren’s sentence based on his verbal threats and physical assault of his brother, who was to testify before the SEC during its investigation into Manhattan Bagel’s falsified financial statements.
In the second case, in November 2002, after opening statements on the first day of a trial, Boren pleaded guilty to 15 counts related to a scheme in which he defrauded 11 investors – including his own in-laws and his girlfriend’s grandparents – out of more than $1.2 million.
In this fraud case, Boren acknowledged that he made misrepresentations to the victims about several non-existent investments, including an initial public offering for an Internet company, municipal bonds that were supposed to pay 12 percent interest per year and the planned purchase of a Santa Monica bagel shop. Instead of investing the victims’ money, Boren used the money to support his lavish lifestyle, including gambling trips to Las Vegas, Atlantic City and the Bahamas.
In the third case, Boren pleaded guilty in May 2002 to making false statements to banks in order to get the banks to stop payment $2 million dollars in cashier’s checks deposited by Boren at gambling casinos in Las Vegas and the Bahamas after losing all of the money gambling in November and December 1997.
The cases against Boren are the result of investigations by the Securities and Exchange Commission, the Federal Bureau of Investigation, IRS-Criminal Investigation, the United States Postal Inspection Service, the Defense Criminal Investigative Service and the Social Security Administration.