A group of prominent banks and a reputable computer leasing company have been hurt by a fraud based on $323.5m in fictitious computer leases. Two persons have been arrested by the Federal Bureau of Investigation and a third could be arrested at any time. The Associated Press reported that $200m of the purloined funds has already been recovered and implied that more will soon be found. The fraud was based on a series of computer equipment leases arranged by Nelco, a Richmond, Virginia computer lessor and financed by a syndicate of banks including Signet Bank of Richmond, NationsBank of Atlanta, Georgia and the Long Term Credit Bank of Japan. Ostensibly, the computer equipment was to be used in five product development facilities being set up by tobacco giant Philip Morris through a subsidiary called Worldwide Regional Exports headed by Edward Reiners. The machines were to be supplied by a New York company, CCS Inc. It now turns out that Philip Morris did not know anything about the plan, that Worldwide Regional Export is an entity owned by Edward Reiners, that Diane McAdams, assistant secretary of Philip Morris Companies, had been impersonated by one Judy Rose Bachiman in an effort to defuse an investigation of the scam and John Ruffo, who heads CCS, has been named by Bachiman as an active participant in the plot. In the meantime, Nelco has filed for chapter 11 bankruptcy protection. In a prepared statement, Nelco’s founder and president, Dick Nelson, said that he is trying to protect all his constituencies, which we take to mean customers, employees and funding sources. Nelco apparently doesn’t want the lending banks grabbing money that might rightfully belong to others. But officially, according to Mike McRaney, a crisis management specialist Nelson hired, Nelco is particularly concerned with the welfare of the lenders. The most thorough description of the plot was provided by FBI agent Wilber E Garrett Jr, in a sworn affidavit based on his investigation. But the Garrett statement lacks details of the source of the computer equipment. That information came to light after Garrett made his statement, in an affidavit sworn by FBI agent Kenneth Mikionis. The case is slowly unfolding and there is still plenty of room for surprises.
From the April 1996 edition of Infoperspectives Copyright (C) 1996 Technology News of America Co Inc. All rights reserved.
