Former Media Execs Face Fraud Charges

Federal fraud and conspiracy indictments were handed up Tuesday in Los Angeles accusing two former top officials of United Press International and Financial News Network of concealing the companies’ sorry financial condition from investors and lenders in the late 1980s.

Among other things, the 24-count, 32-page grand jury indictment accuses former UPI and FNN Chairman Earl W. Brian and his chief operating officer, John F. Berentson, of lying to obtain $56 million in bank loans from the Security Pacific and Toronto-Dominion banks in 1989. They are accused of methodically falsifying FNN’s books to deceive banks, regulators and the investing public, using millions of dollars from fraudulent lease transactions to keep the companies running, and lying to their outside accountants to conceal the situation.

Brian, once known as a conservative Republican politician in California, headed Infotechnology Inc., a New York company with controlling interests in UPI, the international news service, and FNN, a business and financial news cable TV network.

The securities and bank fraud charges also accuse them of booking phony income from another Infotech-related company, Institutional Research Network, for goods and services ostensibly provided to help IRN develop a multisource news product in 1990.

In June, 1993, and without admitting guilt, Brian settled Securities and Exchange Commission charges of inflating FNN’s revenues by millions of dollars.

Brian’s attorney, Richard Marmaro, said he had yet to see Tuesday indictment and declined comment. Berentson’s attorney, Mark Beck, said he believes the case will go to trial and that Berentson will dispute the charges and that he looks forward to telling his side of the story.

Three executives also named in the SEC suit--C. Steven Bolen, Gary A. Prince and Mitchell H. Young--were named co-conspirators to Brian and Berentson in the criminal indictment returned Tuesday. Prosecutors Carolyn J. Kubota and Sean Berry said Bolen and Prince had entered guilty pleas and were cooperating with the government.

Bolen pleaded to charges of conspiracy, securities fraud and bank fraud. Prince pleaded to charges of conspiracy and making false statements to the SEC. Young was to be arraigned Monday.

Los Angeles-based FNN, which suffered losses of $72.4 million for fiscal year 1990, filed for Bankruptcy Court protection in 1991 and later sold its core media operations to CNBC, a division of the National Broadcasting Co.

UPI, once the second-largest U.S.-based news service, also filed for bankruptcy protection in 1991. It was later sold to a Saudi group.

Brian, 53, of Easton, Md., is a Duke University medical school graduate and a decorated veteran of the Army Medical Corps in Vietnam. He was secretary of California’s Health and Welfare Agency at age 30, when Ronald Reagan was governor. He sought the GOP nomination against Democratic Sen. Alan Cranston in 1984 but lost in the primary.