
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, May 25, 1990                   TAG: 9005250702
SECTION: VIRGINIA                    PAGE: A6   EDITION: EVENING 
SOURCE: LESLIE TAYLOR STAFF WRITER
DATELINE:                                 LENGTH: Medium

GUILTY PLEA ENTERED IN LOAN SCAM

The scheme sounded good. Claim to be a broker with access to foreign lenders willing to make multimillion-dollar 10-year loans at interest rates lower than those offered by domestic lending institutions.

Charge the recruited investors a retainer - 1 percent of the loan amount - paid in advance and applied to the loan at closing or refunded if the loan did not close. Borrow 10 times the requested loan amount, give the investor his or her money off the top and reinvest the remainder at a higher interest rate.

In effect, make millionaires of investors.

The scheme would have worked had Stuart O. Maxwell, a Martinsville businessman, closed on any of the loans.

Maxwell pleaded guilty Thursday in U.S. District Court in Roanoke to charges stemming from a loan scam aimed at businesses in Virginia, New York, Pennsylvania, Louisiana and Colorado.

Maxwell was charged last year with netting $196,000 from retainers paid to him by businessmen, knowing that he would not be able to find a lender.

In a scheme that ran from April 1986 to April 1987, 10 businessmen mailed or wired retainers - ranging from $15,000 to $35,560 - to Maxwell but were never repaid, an FBI agent testified Thursday.

Jerry Getz, an FBI agent in Danville, testified that Maxwell purported to have contact with overseas lending institutions. But of the banks that Getz checked - in Switzerland and Luxembourg - none recalled ever having dealt with Maxwell or his business, Royale International Inc.

Maxwell appeared to have spent the retainers as soon as the money was deposited into his bank account, Getz testified. Bank records showed that his account balance fluctuated greatly from month to month during the scheme.

Asked by Judge James Turk what Maxwell did with the money, Getz said, "I honestly don't know. He paid a lot of bills. He had no illicit-type habits."

One check, written for $1,000, was made out to the attorney who represented Maxwell in a December 1986 embezzlement case, Getz said. Maxwell was convicted of embezzlement while working as an insurance agent in Martinsville. He served four months at a prison farm.

by CNB