Canadians Charged With Bank Defraud
.c The Associated Press
NEW YORK (AP) - Two executives of a Canadian-based company have been indicted on charges of stealing more than $32 million from a British bank, Manhattan District Attorney Robert Morgenthau said Thursday.
He said the defendants, Jack Banks, 51, and Larry Weltman, 37, were arrested last Friday at the U.S. District Court building in Manhattan where they are defendants in a class-action lawsuit alleging securities fraud.
Both were charged with first-degree grand larceny and scheme to defraud under the state's general business law. They face up to 25 years in prison if convicted of grand larceny, the top count.
State Supreme Court Justice Robert Lippmann set bail at $35 million for Banks, who said he has homes in Ontario, Gibraltar, Israel and Florida. The judge set bail at $3 million for Weltman, who lives in Thornhill, Ontario.
Morgenthau said Banks, chief executive officer of Galaxiworld.com, and Weltman, the company's chief financial officer, defrauded a Manhattan branch of Coutts & Co. of $32 million by artificially inflating the value of their company's stock to get loans.
The defendants used Laser Friendly - the former name of Galaxiworld.com - to acquire companies that make lottery tickets, betting slips and other paper betting supplies, Morgenthau said. At some point, he said, they bought such a company in the state of Washington.
In Washington, companies that make those supplies are regulated by the state and require licensing and regulatory approval. When Laser Friendly applied to Coutts for loans, its officers neglected to mention that it had not yet received licensing and regulatory approval, Morgenthau said.
Coutts gave Laser Friendly loans totaling $32 million. The bank lost a total of $28 million when only $4 million of the loan was recovered.
Meanwhile, Laser Friendly was the target of a ``cease and desist' court order obtained by Washington's gaming commission and had to pay the state $750,000 in fines and fees, Morgenthau said.
The district attorney said the defendants also defrauded investors who bought Laser Friendly stock at the artificially inflated prices, without knowing the truth about the regulatory status of the company's acquisitions.
AP-NY-03-02-00 1626EST |
