NEW YORK (AP) _ Nine people, including reputed mobster Michael Franzese, have been indicted for an alleged racketeering conspiracy that bilked banks, insurance firms and the state of New Jersey of some $5 million.

Seven of the nine pleaded innocent during arraignment Thursday at the federal courthouse in Uniondale.

Franzese, 34, of Brookville, did not appear and his lawyer said that was because prosecutors had not given sufficient notice.

Also absent from arraignment proceedings was Anthony Tomasso, 46, of Coral Springs, Fla., who was arrested in that state Thursday.

The 28-count federal indictment protrayed ''the movement of significant racketeers into sophisticated and complicated business crimes for which they reaped millions of dollars in illegal profits,'' said Edward A. McDonald, chief of the Justice Department's Brooklyn-based Organized Crime Strike Force.

McDonald said some of the alleged victims of the ''Franzese group'' included General Motors, Chemical Bank, the Chubb Group of insurance companies, Beneficial Finance Corp. and Mazda Motors of America.

He said the health and welfare fund of the Allied International Union, the largest union representing security guards on the East Coast, was cheated out of $590,000 through embezzlement and kickbacks, including a vacation in the Virgin Islands for some of the defendants.

Tomasso was identified as president of the union and manager of its health and welfare fund.

McDonald declined to link Franzese with any major faction of organized crime, although his stepfather, John ''Sonny'' Franzese, 65, has been identified by local law enforcement officials as a leader in the Colombo crime family.

The indictment charged some defendants duped the Union Indemnity Insurance Co. of New York into putting up a $500,000 bond for their firm, Houston Holdings Inc., to do business in New Jersey.

Houston Holdings failed to pay New Jersey more than $3 million in motor fuel taxes, leaving Union Indemnity liable. The insurance firm has since been placed in receivership, officials said.

In other alleged schemes: Chubb and Son Inc. was taken for $24,000 on a false sailboat theft claim; Chemical and other banks were victimized by more than $11,000 in phony credit card purchases; and Mobil Oil Corp. lost $67,000 when a defendant allegedly bought fuel products with bad checks and then faked a service station robbery to avoid payment.

Several defendants were accused of bilking Beneficial Finance of $1 million by providing false information for the financing of two car dealerships.

Other named in the indictment were:

- Louis Fenza, 34, of Jericho, identified as manager of Lynn Mazda, and an official of the Allied International Union and its health and welfare fund.

- Frank Castagnaro, 40, of Amityville, alleged to have operated a service station for the group.

- Frank Cestaro, 46, North Bellmore, an auto body shop operator.

- Walter Doner, 53, Ronkonkoma, identified as president of Rumplik Chevrolet.

- Harold Sussman, 44, East Meadow, identified as an accountant for Franzese.

- Gerard R. Nocera, 59, Wyckoff, N.J., identified as vice president of Beneficial Commercial Corp., a division of Beneficial Finance.

- Mitchell Goldblatt, 49, of Brooklyn, legal counsel to the Allied union and welfare fund.

All nine were charged with racketeering conspiracy, which carries a maximum 20-year penalty. In addition, Franzese, Fenza, Castagnaro, Cestaro, Doner and Sussman were charged with tax conspiracy for alleged false financial information about themselves and several Franzese companies, including two motion picture firms: Westen International Pictures Inc. and Motion Picture Making Inc.