THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, April 21, 1996 TAG: 9604210085
SECTION: FRONT PAGE: A15 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: ALEXANDRIA LENGTH: Medium: 63 lines
Two people implicated in a scheme to swindle six banks out of $323.5 million have had their financial assets frozen by a federal judge.
Prosecutors want the assets to be available for distribution to victims if the suspects are convicted.
Over the past month, U.S. District Judge T.S. Ellis III has approved restraining orders requested by federal prosecutors, according to court records. The orders anticipate seizure of the assets of Edward J. Reiners and Joseph Ruffo.
The frozen sums fall $127 million short of the $323 million banks lent to two fictitious companies that prosecutors allege were set up by Reiners, a former employee of Philip Morris Cos. Inc. who is being held on a bank fraud charge in the case.
In a separate order, Ellis froze $174 million in assets under the control of Ruffo, chairman of Centralized Computer Services Inc., a New York computer supplier. Prosecutors allege Ruffo's company received most of the $81 million that Signet Bank advanced as part of a deal to finance equipment for a bogus research project. Ruffo maintains he was duped by Reiners, and has not been charged in the case.
One other person, Jody R. Bachiman of Cliffside Park, N.J., has been charged in the case.
Reiners allegedly posed as a Philip Morris executive to convince Signet, NationsBank and others that the company needed loans to buy computers for a cigarette research and development project. The project did not exist.
Under the court order approved by Ellis, $22 million in Reiners' assets have been frozen and will be turned over at least temporarily to the U.S. Marshals Service.
According to court papers, Reiners' assets now under the control of federal authorities include money in six New York bank accounts under the name of Reiners, his wife, and two companies he heads - World-wide Regional Exports and Park Business Forms Inc.
Also frozen is a penthouse Reiners owns at the Trump Palace Condominiums in New York City and a house he owns in Somers, N.Y., court papers said.
Authorities sought to freeze Ruffo's assets because they suspect legitimate money might be mixed with cash from the deals that Reiners struck with Signet and the other banks.
The assets of Ruffo's Centralized Computer include a broad portfolio of investments.
The speculative investments will be converted into government securities pending the outcome of legal proceedings.
The deal involved a complex, four-way flow of money and paper apparently based on years of legitimate dealings between the banks, Reiners, Centralized Computer and Nelco Ltd., a Richmond computer leasing company.
Nelco recently filed for reorganization under Chapter 11 of the bankruptcy code.
Six banks lent money as part of the deal. The ones with the greatest exposure are Signet Bank ($81 million) and Nationsbank ($60 million). The lenders have said they expect to recover most of the money.
KEYWORDS: BANK FRAUD by CNB