In 1998 and 1999, Mr. Georgine secretly offered directors and officers exclusive opportunities to purchase a total of 8,000 shares of ULLICO stock before the annual adjustment of its stock price was made. (Union pension funds, which held the vast majority of ULLICO's stock, were virtually shut out of the surefire get-rich-quick scheme.) In a Dec. 17, 1999 confidential memo, for example, Mr. Georgine offered the union directors and officers the opportunity to purchase 4,000 shares of ULLICO stock at $54 per share. Global Crossing closed at $52.56 (nearly two-and-a-half times its year-earlier price of $22.50) on Dec. 16, 1999, the day before Mr. Georgine wrote his confidential memo. Thus, it was a certainty that ULLICO's share price would soar when it was reassessed two weeks later. As it happened, the ULLICO shares purchased for $54 jumped in value to $146 after the annual share-price adjustment.
In March 2000, however, Global Crossing's stock price began to fall. By December 2000, it had plummeted below $15 a share. Global Crossing's collapse would adversely affect ULLICO's share price in a very big way. (But, not to worry if you were a ULLICO officer or director.) During December 2000 and January 2001, ULLICO repurchased more than 200,000 shares from its union-boss directors and officers at $146 per share. Shares purchased by the bosses a year earlier at $54 were redeemed at $146, yielding a profit of nearly $100 per share, even though Global Crossing's share price had plunged, necessitating a huge markdown in ULLICO's share price. Mr. Georgine netted a pre-tax profit of $840,000, while Mr. McCarron collected $420,000. Mr. Maddaloni reportedly pocketed nearly $250,000.