BLUTRICH, MICHAEL D
9/5/95 $1,000.00
NEW YORK, NY 10016
BLUTRICH HERMAN & MILLER -[Contribution]
CLINTON/GORE '96 PRIMARY COMMITTEE INC
1997-07-24 -- Insurance fraud, money laundering.
Insurance fraud and money laundering.
CHARLES R. WILSON, United States Attorney for the Middle
District of Florida, announced today that a federal grand jury
sitting in Orlando returned a 91-count indictment charging
PATRICK C. SMYTHE, age 52, of Alphanetta, Georgia; MICHAEL D.
BLUTRICH, age 47, of New York, New York; individually and
d/b/a Blutrich, Falcone & Miller, d/b/a Blutrich & Miller,
d/b/a Blutrich, Herman & Miller; LYLE K. PFEFFER, age 37, of
New York, New York, SHALOM WEISS, age 43, of Munsey, New York;
RICHARD B. HERMAN, age 40, of White Plains, New York,
individually and d/b/a Law Offices of Richard B. Herman, d/b/a
Blutrich, Herman, and Miller; LPDA ACQUISITIONS, INC.;
NULENDA, INC.; FUTURE DIVERSIFIED PROJECTS, INC.; ACTUAL
FUNDING, INC.; IWUB CORP.; ADOS EQUITIES CORP.; SHEFA, INC.;
SPRITE EQUITIES CORP.; and ISPEP EQUITIES, CORP. with multiple
counts of wire fraud, interstate transportation of property
obtained by fraud, and money laundering. The defendants are
alleged to have engaged in various schemes from April 1992
until July 1997 to defraud National Heritage Life Insurance
Corporation (NHLIC), a wholly-owned subsidiary of LifeCo
Investment Group, Inc. (LifeCo), of money and property, and to
defraud LifeCo and NHLIC, the shareholders of LifeCo and
NHLIC, and the policy holders of NHLIC of their intangible
right of honest services from LifeCo and NHLIC officers,
directors, attorneys, and committee members.
SMYTHE was a former Director, President, Chief Operating
Officer of LifeCo and former Director, Executive Vice
President and Chief Operating Officer of NHLIC. BLUTRICH is
a New York attorney and was former outside counsel for LifeCo
and NHLIC. PFEFFER, a New York businessman, was former
consultant for LifeCo and NHLIC. The indictment alleges that
SMYTHE, BLUTRICH and PFEFFER, under the guise of obtaining or
making purported capital investments totalling approximately
$23,000,000 into LifeCo from LPDA Acquisitions Corp. and
Future Diversified Projects, Inc., companies owned and
controlled by PFEFFER, secretly diverted assets of NHLIC
totalling approximately $47,000,000 to bank accounts of LPDA
and NULENDA at Standard Chartered Bank, New York, New York for
the purpose of establishing lines of credit for LPDA
($15,000,000) and NULENDA ($20,000,000).
The indictment charges that SMYTHE, BLUTRICH, and PFEFFE
thereafter pledged the $47,000,000 of NHLIC funds to secure
the lines of credit, and then used said lines of credit to
make the $23,000,000 in capital investments into LifeCo, and
diverted the balance to their own use and benefit, or to the
use and benefit of friends and associates, and to corporations
controlled by themselves or their friends and associates.
HERMAN, a New York attorney, is alleged to have assisted
the fraud by transferring $11,000,000 of the proceeds of the
fraudulently-obtained NULENDA line of credit, disguised as a
capital contribution into LifeCo from FUTURE DIVERSIFIED in
exchange for preferred stock of LifeCo. HERMAN is also
charged with money laundering. WEISS, a businessman from
Brooklyn, New York, is alleged to have used corporations he
owned and controlled to assist in the laundering of
approximately $6,300,000 of the NULENDA/FUTURE DIVERSIFIED
funds, and to have directed New York attorney Bernard Shafran
of the law firm of Frenkel & Herskowitz to issue a substantial
portion of said funds to his own use and benefit or to the use
and benefit of business associates of WEISS.
In the Spring of 1994, the Insurance Commissioner for th
State of Delaware was appointed receiver for NHLIC, based upon
a finding that the company's capital was severely impaired.
United States Attorney Charles R. Wilson stated "The
Office of the United States Attorney, Internal Revenue
Service, Federal Bureau of Investigation and United States
Postal Inspection Service have formed a task force to deal
with issues arising from the collapse of National Heritage
Life Insurance Company. The actions of the defendants in this
case put the financial security of over 35,000 policy holders
and annuitants in jeopardy. Our investigation is continuing
and we expect to present many additional matters to the grand
jury for its consideration. The Office of the United States
Attorney will vigorously prosecute all persons who threaten
the safety of financial institutions, including insurance
companies, through theft and fraud."
The charges filed are the result of a continuing joint
investigation conducted by the Internal Revenue
Service/Criminal Investigations Division, the Federal Bureau
of Investigation, and the United States Postal Inspection
Service, into matters related to the collapses of NHLIC. The
case will be prosecuted by Senior Litigation Counsel Judy K.
Hunt and Assistant United States Attorney Thomas W. Turner of
the Orlando Division of the United States Attorney's Office.
To date, three persons have been convicted in this
investigation. In March, 1995, Jay I. Bartz, a former
attorney who practiced at Scottsdale and Parazone, and a
former director of LifeCo, pled guilty to money laundering by
transferring approximately $2,200,000 of funds fraudulently
for NHLIC to an offshore account in the Channel Islands for
the benefit of SMYTHE. On December 14, 1995, Bartz was
sentenced in Federal District Court in Phoenix, Arizona to
five years probation and a $3,000 fine.
On December 2, 1996, DAVID L. DAVIES, was sentenced by
Judge Patricia C. Fawsett, United States District Court Judge,
Orlando, Florida, to 84 months imprisonment, two years
supervised release and ordered to pay back taxes, penalties
and interest totalling $2,163,427, to pay restitution
totalling $10,503,728, and to perform 100 hours community
service, following his guilty plea to three counts of wire
fraud and one count of federal income tax evasion. The
indictment against DAVIES alleged that in September 1990, TRI-
ATLANTIC HOLDINGS, LTD., a Delaware corporation owned and
controlled by DAVIES and others, acquired beneficial ownership
of 52.3% of the common stock of Lifeco and control of NHLIC.
That indictment charged that DAVIES and TRI-ATLANTIC HOLDINGS,
LTD. devised and executed a scheme and artifice to make it
appear that the Lifeco stock was purchased with new capital,
whereas in fact most of the acquisition funds were diverted
from NHLIC under false pretenses. That indictment further
alleged that some of the acquisition funds were embezzled from
another individual. DAVIES was also charged with causing
fraudulent loans in the total amount of $10,400,000 to be
issued to assorted corporations which he secretly controlled,
and to other corporations which then secretly, immediately
forwarded the proceeds to Davies' corporations. |
