Brokerage Killer Revealed as Protected U.S. Witness

WASHINGTON —  The distraught investor who killed a Merrill Lynch branch manager, seriously wounded his broker and then killed himself was a protected federal witness given a new name and relocated in Miami 10 years ago after he testified in a Kansas City fraud investigation, Justice Department officials said Tuesday.

Arthur H. Katz, a disbarred attorney living with his family under the name Arthur Kane, was “a very docile, nonviolent guy who must have flipped his cork,” said Gerald Shur, head of the department’s witness protection program.

Shur said he arranged for Katz to move to Miami in 1977, after he received “good information that his life was in danger.” Katz had helped the government in investigations of a Philadelphia stock swindle and of the Kansas City case, in which he pleaded guilty to insurance fraud conspiracy.

No Waiting for Gun

Police in Miami said that Katz had purchased the .357-caliber magnum revolver from a Miami shop about an hour before he used it to kill Jose Argilagos, the Merrill Lynch branch manager, and severely wound his broker, Lloyd Kolokoff. A new Florida law, effective Oct. 1, eliminated a 48-hour waiting period for taking possession of handguns, during which background checks were run on the buyers.

“Under the old statute, this tragedy could not have taken place with this handgun,” Cmdr. Bill Johnson of the Metro Dade Police said Tuesday.

The new law allows a person to obtain a gun 48 hours after signaling intent to make the purchase. Police said that Katz had done so by visiting the Tamiami Gun Shop sometime last Friday and indicating an interest in the weapon.

Katz, who reportedly lost millions of dollars in the recent stock market crash, had mentioned suicide to relatives over the weekend, police detective Rey Valdes said, but he would not identify the relatives.

Stanley E. Morris, director of the U.S. Marshals Service, which provides protection for federal witnesses, called Katz’s action “a tragedy,” but said his agency had no evidence that Katz had a violent nature or that the shootings had “any relationship to his involvement in the witness program.”

Mob Threats Hinted

The threats that led to Katz’s inclusion in the witness-protection program allegedly came from “major figures in Philadelphia,” after Katz gave authorities information about the Magic Marker stock swindle of 1972 and 1973. That scheme involved an associate of the late mob financier Meyer Lansky, one source familiar with the case said.

David W. Russell, a Kansas City, Mo., lawyer who represented Katz in the insurance fraud case, said that he pleaded guilty in 1978 to a conspiracy in which he had submitted false medical reports in auto accident cases.

Katz testified as a prosecution witness at the trial of three others involved in the conspiracy, and all were convicted. Katz drew a two-year prison sentence and a $5,000 fine. He served six months in a minimum-security halfway house and was disbarred in 1979, according to federal and state authorities.

‘A Very Good Citizen’

The Marshals Service helped Katz land a job as a hearing examiner for the Social Security Administration in Miami, a spokesman for the marshals said, but had not been in contact with him recently because he “was a very good citizen, very law abiding, very successful in the community.”

Russell, who represented Katz in Kansas City, described him as “likable, even happy-go-lucky--and that’s what shocked me so much when I heard about (the shootings.)”

Ronald J. Ostrow reported from Washington and Michael Wines from Kansas City. Times researcher Lorna Nones contributed to this story from Miami.