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Arson Scheme-Long Island, NY
NEW YORK (AP) - Eight men were charged Tuesday with driving a
Long Island pharmaceutical company into bankruptcy by lying to
investors, torching a Brooklyn warehouse and bribing a fire marshal
to cover their tracks.
Federal complaints filed in Brooklyn alleged that four of the
defendants offered the fire marshal $100,000 to rule that an arson
last year at a warehouse used by Allou Healthcare Inc. was an
accident. They allegedly hoped to use the report to collect on a
$100 million insurance policy.
The fire marshal was working undercover with federal
investigators, who secretly recorded the negotiations. The men had
paid $50,000 before their arrests.
The defendants, including five of Allou Healthcare's top
officers, were awaiting arraignment in federal court in Brooklyn on
securities fraud, bribery and other charges.
The publicly traded company, which distributed health and beauty
products, filed for bankruptcy in April.
The men "are charged with schemes whose venality, corruption
and willful disregard for public safety staggers the imagination,"
U.S. Attorney Roslynn Mauskopf said in a statement.
Prosecutors allege that the defendants cheated investors by
fabricating hundreds of millions in sales and inventory to meet
quarterly earning projections and maintain its line of credit. They
allegedly pocketed $15 million in the scheme's final year alone.
In April, Allou acknowledged that it overstated assets used as
loan collateral and fired four senior executives. Four of the
company's operating subsidiaries agreed to file for bankruptcy
after a group of lenders was preparing to force the issue. Allou
defaulted on loans totaling more than $65 million, which were
secured by inventory lost in the fire.
(Copyright 2003 by The Associated Press. All Rights Reserved.)
Long Island pharmaceutical company into bankruptcy by lying to
investors, torching a Brooklyn warehouse and bribing a fire marshal
to cover their tracks.
Federal complaints filed in Brooklyn alleged that four of the
defendants offered the fire marshal $100,000 to rule that an arson
last year at a warehouse used by Allou Healthcare Inc. was an
accident. They allegedly hoped to use the report to collect on a
$100 million insurance policy.
The fire marshal was working undercover with federal
investigators, who secretly recorded the negotiations. The men had
paid $50,000 before their arrests.
The defendants, including five of Allou Healthcare's top
officers, were awaiting arraignment in federal court in Brooklyn on
securities fraud, bribery and other charges.
The publicly traded company, which distributed health and beauty
products, filed for bankruptcy in April.
The men "are charged with schemes whose venality, corruption
and willful disregard for public safety staggers the imagination,"
U.S. Attorney Roslynn Mauskopf said in a statement.
Prosecutors allege that the defendants cheated investors by
fabricating hundreds of millions in sales and inventory to meet
quarterly earning projections and maintain its line of credit. They
allegedly pocketed $15 million in the scheme's final year alone.
In April, Allou acknowledged that it overstated assets used as
loan collateral and fired four senior executives. Four of the
company's operating subsidiaries agreed to file for bankruptcy
after a group of lenders was preparing to force the issue. Allou
defaulted on loans totaling more than $65 million, which were
secured by inventory lost in the fire.
(Copyright 2003 by The Associated Press. All Rights Reserved.)