Businessman Accused of $2.6-Million Arson Fraud

An Agoura Hills businessman has been arrested on an 18-count federal indictment charging that he masterminded an elaborate $2.6-million arson-insurance fraud involving a 1982 fire at a Sun Valley company he owned, the U.S. attorney’s office in Los Angeles said Thursday.

Robert Feldman, 55, was arrested at his Agoura Hills home Monday night by arson investigators from the Los Angeles City Fire Department and the U.S. Bureau of Alcohol, Tobacco and Firearms, culminating a three-year investigation, Assistant U.S. Atty. Richard Callahan said.

A 17-page indictment, returned Sept. 12 by a grand jury in Los Angeles, alleges that Feldman arranged the Jan. 30, 1982, fire at the 20,000-square-foot plant of Grow Gear Inc., which manufactured aircraft parts. The indictment, which was unsealed the day after Feldman’s arrest, portrays the arson as the centerpiece of a plot to avoid paying for goods and services from creditors, escape creditors, defraud an insurance company of $2.6 million and weave a cat’s-cradle pattern of transactions to hide the money--including the transfer of more than $1 million to a bank in Israel.

3-Part Indictment

“We view it as one large scheme, planned and pieced together deliberately from the start,” Callahan said. “It’s all facets of a whole and the indictment is subdivided into the three parts: bleed it, burn it and beat it.”

If convicted on all counts, each a felony, Feldman could receive a maximum sentence of 92 years in prison and $30,000 in fines.

Arraignment of Feldman, who is being held at Terminal Island, is scheduled Monday in U.S. District Court in Los Angeles. A bail hearing is scheduled this morning, and Callahan said he will argue that Feldman should be held without bail.

Feldman was the only person indicted but the investigation is continuing, Callahan said.

“This arrest is the result of a lengthy and extremely difficult investigation that involved four members of a joint force of arson experts from the federal government and the city, plus a team of federal auditors who spent three years putting together a jigsaw puzzle,” Callahan said.

Feldman could not be reached for comment.

Bought Firm in 1976

Grow Gear, which Feldman bought in 1976, was a 40-year-old company that produced gears for for aircraft and, in some cases, for cars. It employed about 60 until five months before the fire, when about a third of the work force was let go, Callahan said.

Manufacturing ceased after the fire, he said.

The indictment alleges that the scheme began when Feldman bought Grow Gear through a straw corporation in Nevada used to shield his assets from creditors. Callahan would not detail Feldman’s businesses before 1976, but the indictment says he had accumulated $1.6 million in debts.

When purchased by Feldman, Grow Gear was a “profitable company with an excellent reputation,” Callahan said. At the time it burned, it was a “financial shambles,” with more than 50 lawsuits pending against it or Feldman personally, he said.

The indictment alleges that, from 1976 to 1982, Feldman amassed another $1.8 million in debts, bringing his total debt to $3.4 million just before the fire.

According to the indictment, Feldman at first had a $1.1-million fire insurance policy on his Sun Valley business, then increased it to $2.7 million in 1981. When he failed to make payments on the premiums, the indictment says, West Coast Insurance Marketing Corp. canceled the policy on Jan. 29, 1982, but gave him a grace period of several days during which it would remain in effect. The building burned at 3 a.m. the next day.

The indictment charges that Feldman ordered six 55-gallon drums of flammable solvent placed inside his plant, and that these were used to start the fire. However, the document does not allege that he set the fire himself. It does not specify who set the fire.

Some of the insurance money went to secured creditors of the business, but Feldman collected more than $2.6 million, the indictment alleges.

Shipped Machinery

The indictment also says that Feldman shipped machinery from the factory to Taiwan several weeks before the fire to save it from the blaze.

Between the time of the fire and late 1984, the indictment alleges, Feldman moved his insurance proceeds around, using various bank and investment accounts, dummy corporations, property, several aliases and a bogus Social Security number.

The indictment traces $900,000 of the money through two local accounts, to a stock brokerage’s investment account in Los Angeles, through two accounts in New York City and then to a bank account in Israel. By that time, another $105,000 was added, making the deposit in Israel just over $1 million.

Between 1982 and 1984, Feldman had accounts and conducted business under the names Aba Mezie, Robert Faye, Robert Irwin Feldman and Robert Aba Feldman, the indictment alleges.

Details of Indictment

Of the counts of the indictment, three allege creditor fraud, eight charge insurance fraud, three allege manipulations of property to hide insurance proceeds, two allege use of fake names and one alleges a false financial statement on an application for a bank loan in Burbank.

The indictment says that, in 1981, Feldman applied for a $150,000 loan from First Interstate Bank in Burbank and claimed that the net worth of Grow Gear was $1,108,955, when it actually was worth only $648,777. Callahan would not say whether Feldman got the loan.

Law-enforcement authorities consider arson among the most difficult crimes to prosecute because the people responsible usually hire others to set the fire, which in turn destroys much of the evidence.

In this case, Callahan said, “There’s no direct evidence. It’s all based on circumstance.”

Referring to the trail of transactions alleged, he said, “Making a case this complex comprehensible to a jury will be one of our primary concerns.”