Thursday, May 8, 2003

Fiorini indicted in fraud


Securities seller faces 79 charges

By James McNair
The Cincinnati Enquirer

Former insurance agent and promissory note pitchman George Fiorini was indicted Wednesday on 79 criminal counts depicting fraud in its most elementary form.

Fiorini
Fiorini
He lied about the securities he sold, took the money, then spent it on himself, family members and friends, the indictment said.

The grand jury case against Fiorini, 53, and his former associate, Stephen R. Ventre, capped six years of investigation by the FBI, IRS and U.S. Attorney's Office in Cincinnati. Fiorini was not taken into custody Wednesday, but was given until next Thursday before making an appearance before U.S. District Judge Timothy Hogan.

Ventre, 38, has agreed to plead guilty to one count of scheming to defraud, according to another document filed in federal court Wednesday.

The indictment accuses Fiorini of fraud, money laundering, filing false income tax returns and other violations of federal law from January 1995 to January 2002. It cites $1.4 million worth of receipts from 33 investors and numerous acts of deception against investors. It depicts how he used investors' money to buy two condominiums in Sarasota County, Fla.

If convicted on all 79 counts, the Miami Township resident faces a maximum of 731 years in prison and a fine of $19.8 million. The U.S. Attorney's Office, which already has seized Fiorini's collection of homes and automobiles, will try to steer as much money back to his investors as possible.

Fiorini's lawyer, assistant federal public defender W. Kelly Johnson, had no comment on the indictment Wednesday. Fiorini was assigned a taxpayer-paid lawyer after declaring that he was too poor to afford counsel.

U.S. Attorney's spokesman Fred Alverson said: "Every effort will be made to make restitution to the victims. However, given the reality of the situation, it's difficult to say exactly what amount of restitution any of the victims will receive. There doesn't appear to be a lot of funds available."

In the late 1990s, Fiorini was running ads on radio, in magazines and on bus benches touting his ability to generate 10 percent returns for his customers. He hired the late entertainer Bob Braun to expand the reach of his so-called 10 Percent Income Plus Plan to senior citizens. Fiorini threw Christmas parties and other events, including a $1 million hole-in-one contest.

But what he sold - promissory notes secured by the mere promise of repayment - were works of fiction, the government contends. The principal wasn't guaranteed. The interest wasn't guaranteed. And the notes weren't risk-free. Today, investors have about $15 million worth of notes that haven't paid interest since 2001. Some of the notes were issued by a company Fiorini called IGW Trust, which he later explained stood for In God We Trust.

Most of the money raised by Fiorini went to a Mason company called Guardian Investments, which was headed by Ventre. A court-ordered accounting showed that Guardian received about $13.5 million from investors, only to squander two-thirds of it in ill-conceived transactions with Ventre's cousin in Los Angeles. Guardian is still trying to get that money back.

Ed and Susan McCarthy of Burlington entrusted more than $50,000 with Fiorini and received promissory notes in Guardian. They took some satisfaction Wednesday in hearing of Fiorini's indictment.

"This isn't complete closure," said Ed McCarthy, a retired factory worker, "but it's a little more satisfying that they're nailing him for criminal offenses. I was afraid that he was going to get totally off and go back in business."

The McCarthys feel doubly bad because $7,000 of the money they invested belonged to a son who had saved it while serving in the Army in Panama.

"We trusted George Fiorini and Guardian with every dollar we had earned and saved," Susan McCarthy said. "We've been married 36 years and by sacrificing vacations, meals out, new houses and fancy cars, we were able to save enough and still see two children through college. Now when we both wanted to be able to spend our time together, I still have to work daily to keep us above water.

"How can Mr. Fiorini sleep nights knowing he has been instrumental in stealing the dreams of so many people?"

In 1998, Fiorini paid income taxes based on $50,515 in reported income - $1.9 million too low, the government said. The following year, it said he declared zero income when he should have reported $548,009.

The FBI, IRS, Postal Inspection Service, Ohio Department of Insurance and Ohio Division of Securities took part in the joint investigation.

E-mail jmcnair@enquirer.com




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