ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, June 2, 1996 TAG: 9606030100
SECTION: VIRGINIA PAGE: B-6 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
A former Philip Morris employee who is charged in a $300 million bank loan scam may plead guilty, his attorney said.
Edward J. Reiners, 51, of Somers, N.Y., waived indictment on bank fraud and money laundering charges, and his attorney said Friday a guilty plea might be in the works.
``That's something that's being contemplated but has not been accomplished. It's under discussion, and it's under consideration,'' Domenick J. Porco of New York told the Richmond Times-Dispatch. Porco was away from home and could not be reached for comment Saturday.
Reiners was arrested March 19 with Jody R. Bachiman, 38, of Cliffside Park, N.J., after the Long-Term Credit Bank of Japan discovered that his claim of being an agent of Philip Morris Cos. Inc. was bogus.
Reiners had worked for years as a computer executive with Philip Morris in New York and had dealt with Richmond bankers and Nelco Ltd., a Midlothian-based computer leasing company, in that capacity before he left the company in 1992, court records show.
In 1994, he approached Nelco about leasing computer equipment for a secret research project on nicotine that he said Philip Morris was conducting outside the United States. Philip Morris has said no such project exists.
Over the next two years, banks lent more than $300 million to Nelco, which thought it was purchasing computer equipment through Centralized Computer Services Inc. in New York for lease to Philip Morris.
No computer equipment was ever delivered, but the lease payments to Nelco and the banks were current when Reiners and Bachiman were charged in March. Bachiman is accused as an accomplice.
The Japanese bank uncovered the fraud by sending Philip Morris a fax to verify that a corporate authorization of Reiners' activity was legitimate.
Nelco filed for protection under Chapter 11 of the Bankruptcy Code shortly after Reiners' arrest. Authorities consider the company and its officers to be victims of the fraud.
Most of the fraudulent loans started with Signet Bank and NationsBank, which arranged for participation by such banks as CoreStates, Bank of Montreal, Credit Anstaldt of Austria, and Hitachi American Credit and Long Term Credit Bank of Japan.
The federal government has frozen almost $200 million in assets under the control of Reiners and Joseph Ruffo, chairman of Centralized Computer Services in New York. Ruffo has not been charged.
At least $100 million remains unaccounted for.
Signet has estimated its maximum exposure at $81 million, and NationsBank has said its potential loss is about $60 million.
LENGTH: Medium: 55 linesby CNB