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Bank Fraud Mastermind Gets 17 Years

May 20, 1998 GMT

RICHMOND, Va. (AP) _ The mastermind of a computer leasing scam that bilked $350 million from a consortium of banks was sentenced Wednesday to 16 years and 10 months in prison.

Edward J. Reiners, of Somers, N.Y., pleaded guilty to one count of bank fraud and one count of money laundering in June 1996.

U.S. District Judge Robert R. Merhige Jr. imposed the 202-month sentence on Reiners. He also gave Reiners five years probation, required him to pay $250,000 in restitution to the banks he scammed and take a financial responsibility class in prison.

Reiners, 53, had faced a maximum of 50 years in prison and $1.5 million in fines.

Merhige said he decided against imposing the maximum sentence.

``I’m going to give him some credit (for cooperating with prosecutors) but I’m not going to give him a medal,″ he said.

Earlier, defense attorney Dominic Porco of White Plains, N.Y., pleaded for leniency for his client, noting Reiners had helped ferret out bank accounts and had forfeited his own funds since his arrest.

``Eighty percent of the money that came back was because of him,″ Porco said.

``It was missing because of him,″ Merhige shot back.

Reiners is a former Philip Morris Cos. Inc. computer executive. After he had left Philip Morris, he pretended he was still working for the company on a secret research project, which turned out to be bogus.

He convinced Signet Bank and six other banks to lend him about $350 million to lease computers for his fictitious project, named Project Star.

Signet Bank, acquired last year by Charlotte, N.C.-based First Union Corp., will receive $61,942 in restitution, according to the conditions of sentencing.

After assessing Reiners’ worth, Merhige also ordered him to pay $69,445 to the Bank of Montreal; $47,876 to NationsBank Corp.; $19,539 to Hatachi Credit America Corp.; $22,113 to Creditanstalt Corporate Finance Inc.; $14,732 to Long Term Credit Bank of Japan and $14,430 to CoreStates Bank.

The scam collapsed after March 1996, when a Japanese bank sent Philip Morris a fax to verify that a corporate authorization of Reiners’ activity was legitimate.

Prosecutors said Wednesday that $13 million of the loan money has not been recovered. Reiners denied knowing the whereabouts of the missing money, and U.S. Assistant Attorney John J. Klein said the government doubted he hid the funds.

Another defendant in the case, John Ruffo of New York City, pleaded guilty in April to 160 counts of conspiracy, bank fraud, money laundering, wire fraud and mail fraud. Sentencing has been set for Aug. 17.