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Bennett indicted for fraud
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June 26, 1997: 7:32 p.m. ET
Financier, three others accused of stealing $700 million from investors
From Correspondent Bill Tucker
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NEW YORK (CNNfn) - The federal government Thursday handed up indictments in the largest case of securities fraud.
Financier Patrick Bennett was charged with 43 counts of securities fraud -- including mail fraud, bank fraud, money laundering, concealing assets and conspiring to obstruct an investigation by the Securities and Exchange Commission.
The government has accused Bennett and three colleagues at the Bennett Funding Group with stealing $700 million from more than 12,000 investors.
U.S. Attorney Mary Jo White minced no words in describing the allegations against the firm's top executives.
"In short, these defendants are charged with committing every variety of crime to carry out their fraud and to hide their fraud from regulators and investors. Even after the scheme was unraveling and after bankruptcy was filed, they tried to conceal and divert remaining assets from creditors and investors," she said.
Bennett Funding allegedly sold more than $2 billion in unregistered securities from 1990-1996. The securities were tied to equipment leases on office equipment, with a return based on fees generated by those leases.
William McLucas, the SEC's director of enforcement, accused the Bennett group of essentially operating a Ponzi scheme where the same leases were sold and re-sold over and over. (150K WAV) or (150K AIFF)
Prosecutors say many of the victims invested and lost their life savings after being assured the investments were safe, secure and in some cases, tax exempt.
To date, the bankruptcy trustees have recovered about $250 million. Of that amount, $100 million has been distributed to secured lenders, including banks.
If convicted on all counts, prosecutors say Bennett could spend the rest of his life in jail.
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