Man Charged With Elaborate Schemes to Defraud Seven Banks of $1.4 Million

An inventive Inglewood liquor store owner created a nonexistent blood laboratory and used a Byzantine series of phony loan applications and financial documents to defraud seven banks out of more than $1.4 million, federal prosecutors charged Wednesday.

Prosecutors said Artie Gilbert Sr. managed to dupe investigators from one bank by claiming that he needed loans for expensive computer-driven blood analyzers, and then prevented the investigators from seeing the nonexistent devices by claiming that they were under quarantine, tainted with AIDS-infected blood.

“It is one of the most sophisticated, ingenious frauds we have seen,” said Bonnie Klapper, an assistant U.S. attorney who is prosecuting the case against Gilbert. “Every layer of fraud you delve into, you find another layer of fraud.”

39-Count Indictment

Gilbert, 39, was arrested Wednesday morning by a task force of FBI and IRS agents and Los Angeles police detectives at his home in the 5200 block of Goldenwood Drive in Inglewood. His arrest came as prosecutors unsealed a 39-count indictment against him that had been handed down Tuesday by a federal grand jury.

The indictment charged Gilbert with mail fraud, bank fraud, tax fraud, wire fraud, interstate transportation of stolen property, conspiracy and making false statements in support of loan applications.

Gilbert, who owns at least three AG’s Liquor Stores in Inglewood and West Los Angeles, was already facing a federal trial for attempting to buy 110 pounds of cocaine from an undercover informant and state charges of grand theft and filing false real estate documents.

Federal officials said Gilbert, who has filed for bankruptcy, is also being investigated by the FBI on allegations of bankruptcy fraud. Late Wednesday, a federal bankruptcy trustee was en route to Gilbert’s home to seize his sprawling dwelling and a 1987 Rolls-Royce that prosecutors claim was purchased through one of the fraudulent loans.

Wearing a gold-colored jogging suit, Gilbert was brought before U.S. Magistrate Venetta Tassopulos for a bail hearing late Wednesday that was continued until today. Gilbert was then taken to the federal detention facility at Terminal Island.

According to the indictment, Gilbert obtained loans totaling $857,500 from four banks--Heller Financial in Chicago and Founders Savings & Loan, Omni Bank and First Interstate Leasing in Los Angeles--between November, 1983, and December, 1985.

In each case, Klapper said, Gilbert told the banks he needed the funds to purchase expensive computer-driven blood analyzing machines for Laboratories Unlimited, his fictitious medical firm.

When Omni Bank sent an investigator to see the blood analyzer, Klapper said, Gilbert took the investigator to a real medical clinic and said that the machine was quarantined because of tainted AIDS-infected blood samples. Instead, Gilbert produced a color photograph of the blood machine from a promotional brochure, Klapper said.

Spokesmen for Omni, Founders and First Interstate could not be reached for comment.

Gilbert also sent the banks phony letters from local doctors, forging the doctors’ signatures, Klapper said. And to support his loan applications, Gilbert submitted fraudulent tax returns, financial analyses and listings of his real estate holdings, Klapper said. The bogus tax returns alone amounted to more than $125,000 in fraudulent deductions, depreciations and investment tax credits, Klapper said.

‘Operating Capital’

According to Klapper, Gilbert later applied for loans from three other banks to obtain “operating capital.” Using similar fraudulent loan applications and financial documents, Gilbert obtained more than $543,000 in loans between April, 1986, and December, 1987, from Bank of Beverly Hills, Wilshire Center Bank and Sanwa Bank.

“We are quite sure that the overwhelming majority of the money went into Artie Gilbert’s pocket,” Klapper said. “Bank records show that some of the money went to loan brokers and some went to other individuals who have not yet been identified.”

Gilbert’s activities had been investigated separately over the last year by federal and Los Angeles law enforcement authorities, Klapper said.