Bernard Mass Is Accused of Defrauding Coast S
An Anaheim Hills businessman who associates say has been responsible for the failure of a score of businesses was arrested Monday on charges of bilking Los Angeles-based Coast Savings out of $1 million.
A federal indictment charges Bernard Mass, 47, with 23 counts of fraud in a scheme that allegedly involved submitting false invoices from a Gardena pharmaceutical company he controlled to obtain advances against a line of credit from a Coast subsidiary.
Mass took control of the firm, Whiteworth/Towne-Paulsen, in 1988, when the company--long the West Coast’s leading distributor of such basic drugstore products as hydrogen peroxide and rubbing alcohol--was in a steep decline.
According to the indictment, from September to November, 1988, Mass prepared false documents to obtain cash advances from Coast Fed Business Credit Corp., a business lending subsidiary of Coast Savings.
He allegedly inflated the value of Whiteworth’s accounts receivable, prompting CoastFed to advance excessive funds to the firm. To support the claims, the indictment says, he prepared false invoices for sales that never occurred.
Some of the sales were to nonexistent companies, according to the indictment. When CoastFed called to verify the sales, Mass arranged for the phone numbers on the orders to be answered in the names of the nonexistent companies, the indictment alleges.
Former Whiteworth employees told The Times that Mass would shout down the hallways asking workers to suggest names to list on invented invoices. He told employees that the scheme netted him between $750,000 and $1.2 million.
Even after it was aware of the scheme, CoastFed officials acknowledge, the bank rolled Whiteworth’s debt over into a new loan and gave Mass time to attempt to work out Whiteworth’s problems.
Assistant U.S. Atty. Anita H. Dymant said Monday that Coast’s losses ultimately totaled about $1 million.
Whiteworth went out of business last year after Mass twice merged it into obscure penny-stock corporations and it twice was evicted by its landlords. Mass had drawn a number of other small businessmen under Whiteworth’s umbrella--each of whose firms failed in turn.
Mass will “vehemently” defend himself against the charges, his attorney, Paul Landau, said in U.S. District Court in Los Angeles during an arraignment before U.S. Magistrate Volney V. Brown Jr.
Twice before, in civil suits, lenders accused companies that Mass controlled of similar kinds of fraud. Mass denied wrongdoing in both instances.
He was indicted once before, in 1972, on federal fraud charges in connection with the operation of a department store in Eastern Pennsylvania. The charges were dismissed when Mass’ father, now deceased, and another co-defendant agreed to plead guilty.
Mass owned or operated a number of other failed Southland firms, including Los Angeles Can Co. and California Sun Dance Inc. in Orange, Discreet Medical Testing Inc. in Santa Ana, Trans-World Pharmaceuticals Inc. in San Bernardino and several car dealerships.
