The former head of Arochem Corp. was charged Wednesday with swindling a group of banks out of more than $150 million in one of the biggest bank fraud cases in U.S. history.
Roy William Harris, 38, of Greenwich, Conn., is the first person ever charged under a 1990 law that U.S. Atty. Otto Obermaier compared to the drug kingpin statutes.
The charge--conducting a continuing financial crimes enterprise--carries a mandatory sentence of 10 years to life in prison.
Harris' attorney, Lawrence Iason, said Harris will plead innocent at his arraignment June 4.
Harris was suspended last December as president and chief executive of Arochem of Stamford, Conn., and its sister company, Arochem International of Ponce, Puerto Rico.
He is the second official at the oil trading and refining company to be indicted on charges stemming from the alleged fraud.
Arochem Treasurer Vincent Dispenza pleaded guilty to bank fraud last month and was expected to cooperate with the government. He also was suspended in December.
At his arraignment, Dispenza said Harris and two other former Arochem officials participated in the scheme, which concerned a $245-million credit line from five banks, led by Chase Manhattan.
Prosecutors say they conspired to deceive the banks about Arochem's financial state in 1990 and 1991.
In one case, phony documents allegedly were created to show that Arochem had $60 million in crude oil stored in Malaysia. In another, three phony contracts allegedly were created to show purchases of $48 million in petroleum products.
"The banks have lost more than $150 million as a result of this fraud," Obermaier said.
Arochem, which was forced into Chapter 11 bankruptcy protection by the banks, has been cooperating with the government, said Assistant U.S. Atty. Howard Shapiro.
The indictment handed up against Harris also charges that he transferred $3.7 million to his personal bank account. Obermaier declined to comment on where the rest of the money went. He said the investigation is continuing.
Harris owned about 60% of the stock in Arochem, a privately held company incorporated in 1988. The company's biggest assets are two refineries in Puerto Rico, which Arochem is trying to sell or lease.
Obermaier called the new federal statute "an important weapon" in prosecuting large-scale financial crimes. "We hope that there are not many such frauds out there," he said.
In 1991, the Manhattan U.S. attorney's office filed 127 bank fraud indictments totaling $109 million--$41 million less than is alleged in this one case.