Albany

A former stockbroker who went to federal prison 12 years ago for defrauding clients of an Albany brokerage is drawing new law enforcement scrutiny amid allegations that he looted a Colonie-based technology company.

Paul J. Ryan, 52, has also been accused by a business associate of trying to shield his assets from being seized by the federal government, which is seeking to recover more than $2.7 million that Ryan owes to victims in his 2001 criminal case.

An attorney for Ryan said the allegations are baseless and that Ryan has done nothing wrong.

Ryan, who has an accounting background, spent three years in prison for scamming clients of First Albany Corp., for which he worked as a broker during the 1990s. Several years after his release from prison, in 2004, he landed a job with Integra Networks, a small but flourishing technology company that makes fiber-optic transceivers used to transmit voice, video and data.

Ryan began working as a subcontractor at Integra in 2007 and, two years later, when the company started to take off, he was hired and eventually appointed president by Integra's chairman and founder, David Prescott.

Prescott met Ryan when they worked together briefly at a local technology company in the late 1990s. Prescott said he looked past Ryan's troubled history, in part, because Ryan assured him it was an anomaly.

"He wanted to get involved and help me grow the company because he's a great sales guy," Prescott said. "I was not opposed to giving someone a second chance. ... I didn't know the con man side of his character."

In Ryan's 2001 criminal case, federal prosecutors said he took money from his clients' accounts by forging their signatures and used it to trade in highly speculative stocks without their consent. To cover his tracks, he altered his clients' financial statements or lied to them about the transactions that appeared on those statements, claiming they were inaccurate. On the day of Ryan's sentencing, an elderly victim in the courtroom called him "really smart and charming." She said Ryan "had an answer for everything."

Looking back, Prescott said, he believes that Ryan used some of the same tactics to fleece Integra Networks. He said Ryan was the only employee who asked not to be photographed for identification purposes.

In 2011, during a routine company audit, it was discovered that bonuses Ryan had received were not being garnished for his restitution payments. Ryan's salary was being garnished at the time, as required by the federal government. Prescott said his company contacted the U.S. Attorney's office to obtain information on Ryan's garnishment requirements and that prompted the federal agency to begin probing Ryan's financial situation at Integra.

Around that same time, Prescott said, he began noticing questionable transactions in company accounts, including Ryan's alleged use of a company credit card at strip clubs. There were also charges for truck rentals that Prescott said Ryan admitted were for another company Ryan owned that recycled electronics equipment. In addition, Prescott discovered that Ryan had cashed company checks for thousands of dollars that he endorsed to himself.

Prescott said he hired Christopher J. Rosetti, a forensic accountant, to conduct a detailed audit of the company's books. In October 2012, Rosetti issued a report indicating that Ryan had allegedly misused corporate funds, made unauthorized ATM withdrawals and manipulated accounting records to allegedly hide the transactions. In some cases, Rosetti said, Ryan endorsed and cashed checks in which he claimed in company books had been paid to vendors, which was false.

"In our professional opinion, Ryan intentionally used Integra's funds to enrich himself and disguised the true nature of the payments by recording certain transactions as if they were legitimate," Rosetti's report states. "Approximately $190,000 of unauthorized payments were made with Integra's funds to enrich Ryan and/or Ryan's personal acquaintances, and these amounts apparently were not reported as taxable income by Ryan or the other third parties."

Rosetti also said that Ryan used $437,500 of Integra's funds to purchase a new house near Loudonville that is deeded to a trust fund in the name of Ryan's daughter.

A month after Rosetti's report was issued, George F. Carpinello, an attorney for Prescott, wrote to the U.S. Attorney's office, accusing Ryan of taking steps to conceal his assets from being seized by the Justice Department. Carpinello said Ryan had placed the new house and his 48 percent of Integra's private stock in the trust fund in his daughter's name. Carpinello claimed the trust fund was set up to keep those assets outside the reach of the Justice Department.

"Ryan had complete control of the books and he routinely gave himself bonuses, he wrote checks to fictitious vendors (that he cashed), and he took money out of the company without authorization for the purchase of his house," Carpinello said in a recent interview. "Ryan purchased 48 percent of this company and he stated in court that he would pay for this out of his future bonuses, but he put that stock in the name of the trust. ... The trust didn't really buy those shares, Paul Ryan bought those shares."

Prescott terminated Ryan, but Ryan's control of the company stock has left him with a minority interest in Integra that makes him a part owner, although he has no part in the company's day-to-day operations.

The finger-pointing between Ryan and Prescott erupted into a court battle in which Ryan sought to have the company dissolved and sold. In a related case, Ryan and a business associate, Gregory Streeter, claimed Streeter was entitled to a 5 percent share of Integra because Streeter had loaned the upstart company $50,000 — at a time when the company would have struggled to obtain any loans due to Ryan's criminal conviction. In February, a judge rejected Streeter's claim.

The U.S. Attorney's office confirmed recently that it is examining Carpinello's allegations against Ryan. Also recently, the Justice Department moved to seize more than $50,000 from a retirement account Ryan had accrued through his work for Integra, court records show.

The questionable transactions by Ryan that were cited in Rosetti's audit are also being investigated by the State Police and Albany County district attorney's office, but Ryan has not been accused of wrongdoing by authorities. It's unclear whether those agencies will take any action.

In a brief telephone interview on Nov. 4, Ryan said: "There's a lot more to this whole thing than meets the eye." He said he believed the district attorney's office would not take any action against him, and declined further comment.

Ryan is now CEO of Control Network Communications/CNC Microtech, a cabling company based in Albany.

Ryan referred questions to an attorney for the trust, Donald T. Kinsella of Albany, who said Ryan is wrongly accused of misusing company finances and of manipulating the books at Integra. Kinsella said Ryan's use of company credit and checking accounts was sanctioned by Prescott and that the checks Ryan cashed were used to pay vendors or for other legitimate business expenses.

"It's a dispute between businessmen involved in a startup business and that's it," Kinsella said.

Kinsella said it's possible Ryan could be left owing more than $1 million in taxes if his restitution debt were to be paid off using the Integra stock, which Kinsella said is potentially worth millions.

Carpinello responded that the Justice Department should take steps to seize the assets that Ryan has placed in the trust he set up for his daughter.

"The idea that Ryan is somehow a victim here is just utterly outrageous," Carpinello said. "He's a victim of his own actions and those actions include he admitted defrauding a number of First Albany customers, and the misappropriation of funds from Integra."

Federal court records indicate that as of last month Ryan has paid $174,959 of his court-ordered restitution, with an outstanding balance of $2.706 million.

Assistant U.S. Attorney Thomas Spina said Ryan is among roughly 54 people in New York's Northern District, which stretches from Kingston to Syracuse and north to the Canadian border, who owe more than $1 million in restitution for their crimes. Spina acknowledged Ryan has made regular payments — often at least 10 percent of his income, as required — but that the agency is also examining the trust fund and other assets he may have, including Integra's privately held stock.

"We're actively pursuing whether the government can obtain an interest in those stocks," Spina said. "It's a closely held stock, so we're looking at what is that stock worth to the government."

blyons@timesunion.com • 518-454-5547 • @blyonswriter