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Ex-ESM Officers Charged With Fraud, Source Says

April 4, 1986

MIAMI (AP) _ A federal grand jury has indicted eight former officers of ESM Government Securities Inc. and an outside accountant on 45 charges of fraud in connection with the firm’s collapse last year, a source said Thursday.

The Fort Lauderdale securities firm failed in March 1985, owing creditors more than $315 million. It also triggered a banking crisis in Ohio that forced the governor to temporarily close 69 state-chartered thrifts.

All but two of the nine men who were indicted have agreed to plead guilty, said a source close to the investigation who confirmed a report published Thursday in the Miami Herald.

The sealed documents could be opened as early as Friday in Florida and in Ohio, said the source, who spoke on the condition he not be identified.

According to the source and The Miami Herald, those indicted were: ESM co- founders Ronnie R. Ewton and George Mead; vice presidents Charles W. Streicher, Timothy Murphy, Stanley Wolfe, Thomas Saunders and Nicholas B. Wallace; and former controller Earl Riddell, who left the company in 1980.

Also indicted was Jose Gomez, formerly an accountant for Alexander Grant & Co., which is accused of certifying ESM’s fraudulent financial statements.

Ewton, who faces up to 20 years in prison upon conviction, has agreed to testify against his former colleagues, the Herald reported Thursday.

Mead and Wallace have not agreed to a plea bargain, the source said.

Attorneys for Ewton and Wallace did not return messages left with their offices.

Samuel Burstyn, an attorney representing Mead, confirmed Thursday his client had been indicted on four counts of fraud and said Mead would fight the charges.

″Mr. Mead ... did some things he felt life and circumstances (required) he should do,″ Burstyn said. ″He shortly thereafter ended the nightmare and went straight to the Securities (and Exchange) Commission and has been cooperating in trying to recoup these losses. He was not one of the original engineers of this.″

Streicher’s attorney, Mike Davidson, said Thursday the U.S. Attorney’s office told him last week they would seek a sealed indictment. But Davidson said he has not been notified of any charges.

The Herald reported that Mead, Ewton and Gomez also will be indicted on federal charges in Cincinnati.

In February, Ewton, Wallace and Gomez pleaded guilty to forging the will of ESM’s former chief financial officer. In December, Mead was indicted by an Ohio grand jury on 10 counts of theft and obstruction of justice.

ESM was founded in 1975 by Ewton, Robert Seneca, who left the company in 1979, and Mead.

Among ESM’s customers who lost money through the firm’s government securities purchases and repurchase transactions were savings and loan institutions and dozens of cities across the country.

03-86 1909EST

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