By Charles Craig

A Florida attorney for former D. Blech & Co. employees was sentenced last week in federal court in New York to five months in prison for obstructing a Securities and Exchange Commission (SEC) investigation.

Lloyd Schwed, of Jupiter, Fla., pleaded guilty in November 1996 to withholding and agreeing to destroy tapes subpoenaed by the SEC, the U.S. attorney's office in New York said. In addition to spending five months in jail, Schwed will be confined to his Florida home for another five months.

The tapes sought by the SEC involved statements to Schwed's clients by the target of the agency's probe. The U.S. attorney's office did not name the target. He was identified only as a "cooperating witness" who is the target of an SEC investigation that began in October 1994 and whose former employees sought damages against him from the National Association of Securities Dealers (NASD).

Schwed represented 10 former D. Blech & Co. brokers in complaints filed with the NASD against the New York investment banking firm's owner, David Blech. The brokers were awarded hundreds of thousands of dollars in damages stemming from the collapse of Blech's business in September 1994.

The federal prosecutors said Schwed, seeking payment of NASD judgments won by four clients plus his legal fees, told the target of the SEC probe he would withhold tapes, described as "very damaging," from the agency in return for $1.45 million.

The target of the SEC probe became a cooperating witness with the federal prosecutors when he informed the government of Schwed's shakedown attempt. Schwed was arrested in New York in August 1996 in an FBI sting.

The SEC has not confirmed it is investigating Blech. When contacted in August 1996 after Schwed's arrest, Blech would not acknowledge he was the government's informant. (See BioWorld Today, Aug. 13, 1996, p. 1.)

Neither Blech nor his attorney returned calls for an interview Friday. *