3 Held in Phony Bond Sale; Ties to PLO Supplier Cited

Three men arrested at a midtown Manhattan restaurant for allegedly trying to sell $35 million in phony Indonesian government bonds have ties to a Middle Eastern businessman who deals in arms for the Palestine Liberation Organization, authorities announced Friday.

Manhattan Dist. Atty. Robert M. Morgenthau said the three men are believed to be part of a scheme masterminded by Hassan Zubaidi, a Palestinian who reportedly lives in Syria.

Zubaidi, who supplies arms and raises money for PLO terrorists, is wanted by the governments of Germany and the United Kingdom in connection with other fraudulent financial schemes, Morgenthau said.

The three men were arrested Thursday as they attempted to sell the fraudulent bonds to an undercover New York City detective in a sting operation by state and local authorities, the district attorney said.

The men were identified as Roberto Esposito, 32, of Pordenone, Italy; Antonio Palmieri, 44, of Naples, Italy, and Alexander Ambrogio, 44, of Apple Valley, Minn.

They were being held pending arraignment on felony charges of attempted first-degree grand larceny, authorities said. They each face a maximum of 15 years’ imprisonment if convicted.

Esposito represented himself as Zubaidi’s agent for the sale of the notes, while Palmieri acted as Esposito’s lawyer and negotiator for the sale, authorities said.

Ambrogio, who is employed by Seneca Capital in Minneapolis, posed as an American representative for the sale, they added.

The three offered to sell the bonds, which have a face value of $35 million and maturity dates running through 1993, at a discounted price of about $15 million, Morgenthau said.

Esposito was tried in Manchester, England, in 1987 on charges involving the sale of phony Indonesian notes, but he was acquitted after the court ruled the prosecution had failed to prove that he knew beforehand that the notes were valueless, Morgenthau said.

Zubaidi obtained the notes in 1985 by perpetrating a fraud against the Indonesia government, the district attorney said.

“Officials of the government have testified at two trials, one of them involving Esposito, that the notes are completely worthless,” he added.