Kin of Admitted Swindler Indicted
Apr. 06, 2000
NEWARK, N.J. (AP) _ The father and brothers of an admitted swindler were indicted Wednesday, accused of defrauding customers at their now-defunct Essex County brokerage of more than $100 million, mainly by selling them investments in fictitious office equipment leases.
The principals of First Interregional Equity Corp., of Millburn, siphoned some $20 million from its operations from 1988-97 to support a posh lifestyle, according to the 13-count federal indictment returned here.
The conspiracy and income tax evasion charges against company founder and owner Herbert Goettlich and two of his sons came 16 months after another son, company president Richard Goettlich, and two employees pleaded guilty to roles in the scheme.
Some of the 1,750 investors in equipment leases were ``close family friends'' of the Goettlichs, and some invested millions of dollars, believing they were buying the rights to the revenue stream from leases for office equipment such as copiers, authorities have said.
To maintain the illusion clients were getting revenue from these leases, they sold more fictitious leases and made payments with that money, Richard Goettlich has admitted.
``This was a ripoff of mammoth proportion for the investors. The losses to some of the individual investors are huge,'' U.S. Attorney Robert J. Cleary said. ``One consolation is that each of these defendants faces hard prison time.''
The brokerage was shut down in March 1997 after the FBI learned of massive shredding, and raided its offices. The Securities and Exchange Commission filed civil charges and had company accounts frozen.
Patricia Zohn, a Newark lawyer involved in customer claims to the parent corporation, said the total losses to customers of First Interregional and its affiliate, First Interregional Advisors Corp., is about $120 million, nearly all of which involved the leases.
Herbert Goettlich and his sons were not arrested, and no date was scheduled for their arraignment. Each faces charges of conspiracy to commit securities fraud, conspiracy to evade income taxes, and three to four counts of income tax evasion. Each charge carries up to five years in prison and hundreds of thousands in fines and restitution.
Goettlich, 79, of Cedar Grove, founded First Interregional in the late 1970s. He could not be reached for comment as no home listing could be found and his lawyer was not immediately known.
Peter Goettlich, 46, of Livingston, had been vice president and a director of First Interregional. No home listing could be found for him, and his lawyer did not immediately return a call seeking comment.
David Goettlich, 43, of Florham Park, a licensed securities broker at First Interregional, was not immediately available for comment, his wife said.
Richard Goettlich, who had been president of First Interregional, pleaded guilty in November 1998 along with treasurer Anthony Gianninoto and Eileen Laine, the company's data processing manager.
They agreed to cooperate in the government investigation and await sentencing; each could get several years in prison. Assistant U.S. Attorney Amy S. Winkelman said she could not comment on whether they have been cooperating.