N&O drops a bombshell on Tony Rand, et al:

A former board member at Law Enforcement Associates says state Sen. Tony Rand tried to recruit him this year to participate in an insider trading swindle.

In a letter to federal regulators made public this week, Martin Perry recounts an Aug. 26 conversation during which he said Rand, chairman of the company's board of directors, schemed to manipulate LEA stock to enrich himself and other prominent elected officials.

A Fayetteville Democrat who is among the state's most powerful politicians, Rand said Wednesday that he remembers taking Perry to lunch that day and that the two discussed ways to increase the value of LEA's stock. Rand said that nothing in that conversation could be construed as a plan to break the law or manipulate the share price.

UPDATED: The full text of Perry's letter to the SEC is available here. H/T Biesecker.

UPDATE II: From section IV, page 5 of Perry's letter:

"I believe that a number of individuals have traded LEA stock based on information obtained from LEA insiders. Several weeks before LEA fired me as its Director of Sales, LEA Chief Financial Officer Briggs showed me and Feldman a Non-Objecting Beneficial Owner (NOBO) list from 2004-2005. The NOBO list included the names of approximately 50 North Carolina politicians, including former and present governors, who were personal friends of both Rand, the Board Chairman, and Carrington, its former owner. The list showed that these persons had purchased large amounts of LEA stock in 2004 and 2005. During those years, LEA was an obscure "penny stock." Briggs, Feldman, and I immediately recognized that the NOBO list strongly suggested that these individuals had invested in LEA stock based on inside information obtained from Rand or Carrington, or other LEA insiders. Feldman and I told Briggs that we intended to report this information to federal government investigators. Feldman and I provided the evidence of insider trading to the government and have been interviewed on the subject of insider trading at length by federal investigators. We are continuing to cooperate with this investigation.

On August 26, 2009, Rand told me that he had previously traded the stock of First Citizens Bank based on inside information. Rand said he had done so based on inside information he obtained from Frank Holding (the President of First Citizens Bank and a personal friend of Rand). Rand told me that he bought the bank's stock at $60 per share and sold it at over $700 per share. Rand told me that he planned "to do the same to LEA stock," and that he hoped that I would join him in his insider trading/stock manipulation scheme.

During this same conversation, Rand said he had a scheme to take LEA to "non-reporting status" and to profit from manipulating the value of LEA stock once it became non-reporting. Rand said that he had participated in a similar scheme with First Citizens Bank. He invited me to join in the scheme.

This insider trading and stock manipulation constitutes shareholder fraud and violates multiple federal laws, laws of the state of North Carolina, and SEC rules and regulations.

Feldman and I informed the United States Attorney in Raleigh of both the insider trading and stock manipulation described above. On September 24, 2009, we were interviewed by special agents for the FBI and IRS and again provided this information."

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