As a stock fraud investigation continues, the top executive at Marx Toys & Entertainment Corp. has resigned and been replaced by one of the firm's directors.
Robert LoMonaco stepped down Feb. 24 as president and chief executive officer. LoMonaco took the job in September, but was arrested less than a month later - along with three business partners - and charged with conspiracy to commit securities fraud. The foursome allegedly made as much as $6 million by artificially inflating Marx's per-share price through buying and selling large blocks of stock.
LoMonaco, who joined Marx as a director in April, remains under investigation, U.S. Attorney Thomas Fallati said in a Feb. 26 telephone interview. Fallati said he expects LoMonaco to be indicted in March.
Robert Bambery, who joined Marx's board in December, has been named CEO. Bambery has 15 years of financial experience in retail and capital markets.
As part of his resignation, LoMonaco waived any compensation - including capital stock - due to him under his employment agreement, Bambery said in a news release.
Jay Horowitz - who owned the firm for 18 years before selling it to Stereoscape.com in 2000 - and Erik Ryen also were named to the Marx board Feb. 24. Horowitz also owns American Plastic Equipment Inc., a machinery dealer in Miami. Ryen has 30 years of experience in robotics and computer programming, according to the news release.
Marx officials could not be reached for comment. The firm is based in Sebring, Ohio, where it operates an injection molding plant and makes vintage Johnny West action figures, as well as a line of medieval-themed toys. Marx also has licensed the Bugs Bunny and Donald Duck characters for use in IM Buddies, which are Internet-activated plush toys that can speak several messages.
LoMonaco was the second major Marx executive charged with stock fraud in late 2003. The first was Steven Wise, who resigned as Marx CEO Sept. 10 after he and stock promoter Larry Vindman were arrested on similar charges. The original complaint against Wise and Vindman was dropped Jan. 13, but Vindman was indicted on the charge two days later, Fallati said. Wise has not been indicted.
Marx's financial report for the first nine months of 2003 showed a loss of almost $4.3 million, compared with the same period in 2002, as sales dropped 57 percent to $86,000.
Marx's stock was valued at 5 cents per share in late over-the-counter trading Feb. 26.
Marx was one of America's largest toy makers for nearly 50 years, launching the yo-yo in 1928 and later introducing the Big Wheel and Rock 'Em Sock 'Em Robots to the market. Founder Louis Marx - once crowned ``The Toy King'' on a Time magazine cover - sold the firm in 1972. It floundered under various owners, with Horowitz acquiring the Marx assets from Chemical Bank of New York in 1982.
Stereoscape.com, a home entertainment equipment supplier, bought the assets in 2000 before changing its name to Marx Toys & Entertainment in early 2003. Marx now owns injection molds used by such toy companies as Remco, Ideal, Aurora, Kenner and Mego, according to the firm's Web site.