Tampa Bay Times from St. Petersburg, Florida • 24

0 6b ST. PETERSBURG TIMES SATURDAY. APRIL 15, 1989 Tampa bank hit by $2-million check scheme By JAMES GREIFF Tim Staff Writer enables an institution to absorb losses. Last year, before the check-kiting problem was uncovered, Commerce Bank lost $563,602. The bank is protected by an insurance policy and bonds that should cover some of the losses, said Ronald Zimmerman, vice president of the Federal Reserve Bank of Atlanta.

AH deposits at the bank's one office, at 2715 MacDill Ave. remain insured up to $100,000. The bank's business hours are unchanged. George Igler, one of the bank's attorneys, said that about $500,000 has been recovered. However, Edward Giunta, chairman of the board and acting president, said the bank was planning to re-capitalize to cover any losses that resulted from the overdrafts.

Igler added that the bank intends to file a plan to change its procedures and reorganize its finances. Giunta has served as president since last Tuesday, when Commerce Bank's board fired Orlando Garcia. Igler said that the check-kiting problem "was part of the reason," Garcia was fired, and added that it was "premature to say who was and who wasn't involved." Garcia could not be reached for comment. The investigation of Lance began April 11, when FBI agent Scudieri received a notice from Commerce Bank that Lance had repeatedly deposited checks in eight different accounts in the bank. The checks, according to his statement, were drawn against accounts at seven other unidentified banks both in and out of Florida.

An unnamed Commerce Bank officer improperly credited the deposits to Lance's accounts without waiting for the checks to clear, enabling C. R. Lance's president, Charles R. Lance to withdraw funds immediately. The checks bounced, but Lance wrote new checks to cover the overdrafts.

They also bounced. Apparently, Lance established this arrangement in June 1988, according to Scudieri's statement. Bank officials would review the daily overdraft statements and telephone Lance's bookkeeper to say which accounts were overdrawn and by how much, FBI agent Scudieri said. Lance's bookkeeper would then dispatch a courier with a check drawn on another bank to cover the overdraft. Between January and March, Lance's accounts showed up every day on the overdraft statements with bigger deficient balances.

This pattern continued until March 28. The next day, Lance visited the bank with his lawyer, insisting that Commerce Bank made repeated mistakes in his accounts. The bank reviewed its records. On April 12, head teller, Joan Padron, and bank attorney, Igler, told Scudieri that the activity in Lance's accounts appeared to be improper and not a result of errors. Lance could not be reached for comment; he did not return calls placed to his office and his home telephone number is unlisted.

Florida corporate records show that Lance is a director or officer in more than a dozen companies, mostly in real estate and construction. Among the Lance concerns that had accounts at Commerce Bank were R. D. J. Financial Services R.

O. F. American National Recycling Inc. and Apple Star. TAMPA Commerce Bank of Tampa, a small neighborhood bank, is a victim of an alleged check-kiting scheme that cost it and prompted an FBI investigation of a Tampa real estate firm, federal investigators said.

The bank's president, Orlando Garcia, was fired earlier in the week in part because of the scheme. The probe, which began late Thursday, is believed to involve other financial institutions in the bay area, other parts of Florida and the Southeast. Thursday afternoon, FBI agents acting on a search warrant entered the Harbour Island offices of C. R. Lance Associates Ltd.

a real estate firm. Telephone records, tax returns, corporate financial statements and minutes of board of directors' meetings were seized as as part of a bank, mail and wire fraud probe. "There is strong evidence of check-kiting activity by Lance for the period January through March 1989," FBI agent Alfred W. Scudieri said in a sworn statement filed in Tampa federal court. Check kiting involves depositing checks from overdrawn accounts and then covering them with checks drawn on still other overdrawn accounts.

Often, checks take several days to clear. By then, a bank can be out substantial amounts of cash. Late Friday, Commerce Bank said that it is cooperating with the FBI investigation, as well as the U.S. Attorney's Office and state and federal banking regulators. Commerce Bank's loss equals its capital level at the end of 1988.

Capital provides a cushion that 1 iYI'itt Pritzker bids for Eastern Icahn may make offer; Ueberroth still interested HHWF A Milken will post security of $700-million iViVt ft I 1 By SCOT J. PALTROW Lot Angelei Times By MARCY GORDON Associated Press BUSINESS DIGEST Trade gap widens 21 percent WASHINGTON The U.S. merchandise trade deficit swelled by 20.9 percent to $1 0.5-biifion in February as Americans increased their appetite for foreign goods, the government said Friday. The Commerce Department said the sharp deterioration in the trade picture reflected a 5.3 percent increase in imports, which swamped a slight 0.6 percent rise in export sales. The report was in line with economists' expectations.

The trade imbalance is expected to increase as prices for imported oil rise and the dollar grows stronger, making U.S. goods more expensive overseas. GM chairman made DETROIT General Motors Corp. chairman Roger Smith received about in salary and benefits last year, placing last in terms of compensation among the chiefs of the nation's Big Three automakers, GM said Friday. In its annual proxy statement, the nation's largest automaker said Smith received $983,000 in salary, exercised $1 -million in stock options and had $68,833 contributed by the company to a savings and stock purchase plan.

Smith also received $1 worth of stock which could be held or liquidated during the following three years. The proxy statement said that in addition, Smith was paid $1 -million early this year for the company's performance during the five previous years. ConAgra backs merger MEMPHIS, Tenn. Holly Farms Corp. shareholders voted Friday on a proposed $1.1 -billion merger with ConAgra Inc.

as Holly Farms managers continued efforts to block a takeover by rival poultry processor Tyson Foods Inc. A preliminary vote count was expected Monday. Meanwhile, ConAgra stockholders backed the merger plan by a 96 percent to 4 percent margin during a special meeting Friday in Omaha. Tyson, the nation's largest poultry processor, is offering for the Memphis-based Holly Farms, a national leader in fresh poultry sales. Suits filed to block Scotty's deal WINTER HAVEN More shareholders filed lawsuits seeking to block a proposed buyout of Scotty's Inc.

by GIB Group, the Belgian retailer that already owns 43 percent of Scotty's stock. In three separate class-action suits, filed in Circuit Court in Lakeland, shareholders allege that Scotty's and some of its directors are trying to defraud shareholders in negotiations for the sale of the company, Florida's biggest building-supply and home-improvement retailer. The suits say GIB'S offer is "grossly inadequate." Scotty's chairman, Scott Linder, said the suits are unfounded. Clearwater company cuts back CLEARWATER Sterile Design Inc. shut down the second shift at its Safety Harbor plant earlier this week.

Employees, who asked not be identified, said that 65 part-time workers were laid off because of sluggish sales. They generally worked a four-hour night shift. Kathie Frisbie, personnel manager with Sterile Design, wouldn't confirm those numbers, but said the shift was eliminated as a "short-term inventory adjustment" and that employees were offered a chance to transfer to the first shift. Sterile Design, a subsidiary of Johnson Johnson, New Brunswick, N.J., makes medical trays used to hold surgical equipment. It also operates a plant in Tampa, which still runs two shifts.

Sahlen's suspends top officers DEERFIELD BEACH Sahlen Associates Inc. said it suspended three executive vice presidents and temporarily replaced chairman Harold Sahlen as a special committee conducts an inquiry into the firm's accounting practices. The committee has retained a law firm in Washington, D.C., to assist in connection with the probe. Based on the inquiry conducted so far, the company said substantial adjustments to its accounts receivables report for prior periods may be needed. Pending completion of the inquiry, the board has accepted Sahlen's offer to take a leave of absence.

The company provides private-investigation services. GM boosts incentives DETROIT General Motors Corp. on Friday increased incentives on some of its Chevrolet, Buick, Oldsmobile and Pontiac cars even as the company pushed its new low-financing program. The automaker boosted or added cash rebates on a variety of cars and light trucks and offered options of financing as low as 2.9 percent on some vehicles. Singer gets Soviet contract TAMPA Singer Link-Miles Simulation Corp.

has received a $19-million contract from the Soviet Union to build several nuclear-power-plant training simulators. Tampa corporate raider Paul A. Bilzerian bought Singer last year, then sold off most of the company for a profit of $1 00-million. gets new president MIAMI American Savings and Loan Association named Roger C. Pastore as vice chairman and chief financial officer.

He was senior vice president and treasurer of Student Loan Marketing NEW YORK Drexel Burnham Lambert's former "junk bond" chief Michael Milken agreed Friday' to put up assets totaling $700-million as security for the that the government is seeking to seize from him under federal racketeering charges. But a federal judge granted him comparatively lenient terms on the separate issue of bail. She allowed Milken to remain out of jail pending a trial on 98 criminal counts by posting a $l-million bond plus his Los Angeles home as collateral. In rejecting a prosecutor's request for stiffer bail terms, U.S. District Judge Kimba M.

Wood essentially agreed with Milken's lawyer, Arthur Liman, who characterized his client as a "homebody" who had shown no inclination to flee the country. Milken's brother, Lowell, who also was named in the indictment, agreed to pledge $50-million in assets as security for the amount that the government wants to seize under the racketeering charges against him. Lowell was allowed to remain free on bail by posting a $l-million bond, plus his home and two California vacation homes that he owns. Attorneys in the case also confirmed that a superseding indictment may be filed in the case, and that this may contain additional or different charges. But it remained unclear when a new indictment might be returned.

The Milken brothers pleaded innocent April 7 to racketeering, mail fraud, securities fraud and insider trading charges. They deny violating any laws and say they will vigorously fight the charges. The March 29 indictment of the Milkens and former Drexel trader Bruce L. Newberg stunned Wall Street because it disclosed for the first time the staggering amounts paid annually to Michael Milken in recent years. For example, he was paid $550-million by Drexel in 1987.

Liman has argued that disclosure of his earnings and wealth will unfairly prejudice potential jurers against him. Prosecutors are seeking from Michael Milken under the terms of the Racketeer Influenced and Corrupt Organizations Act, known as RICO, which allows the government to seize an amount equal to all of the proceeds of a continuing criminal enterprise. The government claims that Milken's junk bond operation in Beverly Hills amounted to such an enterprise because it allegedly involved defrauding customers, insider trading and securities fraud. If the Milkens had not reached agreement on putting up the total of $750-million, the U.S. Attorney's Office in Manhattan could have asked the judge to freeze their assets or force them to post a bond for the full Under the arrangement they agreed to, the Milkens will still receive the interest earned on the amount they have pledged as security.

AP Junk-bond wizard Michael Milken smiles as he enters federal court in New York on Friday. Milken agreed to post $1-million bond and put up his Los Angeles home as collateral. Under Michael Milken's agreement, he will deposit $300-million in cash or liquid assets in a bank account to be supervised by the government. He will pledge another $300-million in "illiquid" assets, mainly his interest in a series of limited partnerships, which can't be converted easily into cash. However, if any of the partnership interests are terminated, the cash proceeds would be deposited into a second supervised account.

Milken also will eventually post an additional $1 00-million in cash, which is what the government estimates he will receive for his ownership stake in Drexel. In a court hearing Friday, Assistant U.S. Attorney John Carroll had asserted that because of the severity of the charges pending against Milken, tough bail terms should be set because of risk that he might flee. Carroll asked that Milken post a $250-million "personal recognizance" bond. Carroll also asked that the full $700-million put up as security for the potential seizure of assets also be pledged as bail.

But the judge rejected both requests after Liman noted that Milken has worked for only one employer since he finished school, that he has been married to his wife for 21 years, that he lives within one mile of the house he grew up in, and that despite knowing for two and a half years that he faced indictment on RICO charges, he has not made any attempt to flee the country. All of this, Liman said, attested to his stability and the likelihood that he will actually show up at his trial. NEW YORK Billionaire hotelier Jay Pritzker resurfaced Friday with a proposal to buy strike-crippled Eastern Airlines, sources said, reviving the chance of a sale following the collapse of a deal with ex-baseball boss Peter Ueberroth's investor group. Ueberroth himself was said to be still interested in reviving his own bid for the airline, and takeover speculator Carl Icahn, chairman of Trans World, Airlines, plans to discuss a possible deal with union representatives this weekend, the sources said. The sources, who were close to the situation but spoke on condition they not be identified, said the Pritzker proposal essentially mirrored a bid he made before the Ueberroth deal was announced April 6.

The value of the Pritzker offer wasn't clear, but based on his earlier offer would be worth about $500-million. Pritzker's representatives presented what they described as an exploratory proposal Friday to a meeting of the 15-member Eastern creditors committee in Manhattan, the sources said. It called for Pritzker to buy Eastern's fleet of around 250 planes for an unspecified cash payment and lease them back to Eastern, the sources said. In addition, Pritkzer would pay Eastern around $100 million cash, receive all Eastern's stock except for an unspecified share to be owned by its unions, and would forgive $185 million in debt Eastern is owed by its parent Texas Air the sources said. Pritzker did not return telephone calls to his Chicago office and Texas Air aides declined to comment on the latest chapter of a tortuous effort to peddle the nation's seventh-largest airline, which has been mired in a bitter strike and bankruptcy proceedings for more than a month.

Texas Air officials said after the Ueberroth deal failed that they intended to restructure Eastern as a smaller airline with about half its prestrike work force and flight schedule. Airlines raise fares Los Angeles Times Several U.S. carriers, led by Continental Airlines, will raise some of their discount fares by as much as $80 round trip, indicating that travelers may be in for another general round of fare hikes. Continental said late Thursday that it will increase most of its discount fares by $20 to $80 a round trip in time for the heavy travel season this summer. The increases, which were matched by Braniff Airlines, Trans World Airlines and America West, apply to round trip tickets with advance purchase requirements.

The fare increases take effect on reservations made after May 27. Meanwhile, American Airlines, United Airlines, Delta Airlines and USAir said they were studying Continental's move but had not decided whether to increase their fares. If such major carriers do not go along with the increases, observers said, Continental and the others may be forced to roll as least some of them back to remain competitive. The increases will primarily affect vacation travelers, who often book flights in advance. Continental, based in Houston, is not raising its unrestricted fares, used mostly by business travelers, "at this time," a spokesman said.

Analysts said fare increases in the airline industry are justified by increased fuel and labor costs. In addition, the analysts said, most airlines have placed large orders for expensive new aircraft. Another reason for the increase is that the strike at Eastern Airlines has idled that carrier's fleet, increasing the demand for seats on other carriers, said William Whitlow an airline industry analyst with the Dain Bosworth investment company in Broadcast empire crumbling at edges By WENDY WEYEN Time Staff Writer Group Ltd. Ill listed liabilities including $736,514 to First Wisconsin Bank. Family Group Ltd.

named Southeast Bank as its largest creditor, with $1,018,608 at stake. Wheeler, who was not available for comment Friday and declined comment earlier this week through his attorney, is known for building or rebuilding independent television stations and tempering their content for family viewing. "I get a rush out of the idea of starting something new and watching it grow," Wheeler said in a 1987 interview. "It's a challenge to take a station and invest in it and watch it come out right on the bottom line." Wheeler, the general adminis trative partner for Family Group Ltd. began his career with stints in public television and with broadcasting magnate Ted Turner.

By 1989, Wheeler has said he planned to own 12 television stations, the most allowed under law, and to make a public stock offering. State Sen. John A. Grant R-Tampa, a limited partner in the two troubled Family Group ventures, declined to say Friday what led to the stations' woes. He said only the bankruptcy is "very disappointing" to investors.

Grant said a deal is near to sell the Roanoke television station, WVFT-Ch. 27. Both limited partnerships filed bankruptcy petitions April 7. TAMPA Two limited partnerships headed by Ian "Sandy" Wheeler, who rules a small broadcasting empire stretching from Florida to Wisconsin, filed petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code.

The two partnerships, Family Group Ltd. Ill and Family Group Ltd. own television stations in Green Bay and LaCrosse, and Roanoke, Va. Wheeler's interests once included television station WFTS-Ch. 28 in Tampa, which he founded in 1980 and sold four years later for $28-million.

Neither bankruptcy filing listed assets of the partnerships. Family Association in Washington, D.C. American, owned by Montgomery, Kinder-Care is Florida's second-biggest thrift with assets of Poe's earnings slide TAMPA Poe Associates which operates 1 insurance agencies in Florida and five other states, said quarterly earnings fell to or 32 cents a share, from or 50 cents a share, in the year-earlier period. Revenues dropped by $377,000, to xtr? -MX.