Ex-Bear Stearns Executive Is Charged With Perjury

A former managing director of Bear, Stearns & Co. has been indicted for lying to a grand jury investigating a money laundering and embezzlement scheme, federal prosecutors said Monday.

Joseph Stella, who had been in charge of the brokerage’s stock loan department, was indicted on one count of obstruction of justice and faces a maximum sentence of five years in prison and a $250,000 fine. The indictment was handed up last Tuesday.

Stella, 46, of Staten Island, N.Y., left Bear Stearns in April. The company was not involved in the scheme.

Stella was one of four defendants named in the 11-count indictment. Others included Stella’s brother and two of his clients.

They are to be arraigned today before U.S. District Judge Charles Haight.

According to the indictment, the defendants laundered more than $1.7 million in checks that reflected proceeds of an embezzlement of securities from Bankers Trust Co. and fees from stock loan transactions on which the recipients sought to evade income taxes.

The Stella brothers are charged with participating in a conspiracy to hide their involvement in the scheme from government investigators. They are not charged with embezzlement.

According to the indictment, another individual named John Farmer, who partly owned and operated Rohill Management Inc., allegedly embezzled the securities with others.

Rohill was a stock loan “finder”--a company that acts as an intermediary between borrowers and lenders in stock loan transactions. The indictment said Joseph Stella had a separate stock loan business with Farmer.

Farmer previously pleaded guilty for his role in the scheme.

According to the indictment, the Stella brothers and other defendants laundered more than $1.7 million in checks for Farmer, themselves and others by converting those checks into cash.