Pair Are Arrested in $323-Million Bank Loan Scheme

Posing as a Philip Morris executive, a former employee of the tobacco giant spun a fantastic tale of a top-secret, offshore cigarette research project to secure $323 million in loans from at least six banks, the FBI said Wednesday.

Edward J. Reiners, 51, of Somers, N.Y., and his alleged accomplice, Judy Rose Bachiman, a 38-year-old secretary from Cliffside Park, N.J., were arrested Tuesday on suspicion of bank fraud.

The FBI said Reiners and Bachiman used Philip Morris stationery and posed as executives of the company when applying for the loans, succeeding in part because of Philip Morris’ healthy credit rating.

It was not immediately known how much they may actually have borrowed--two banks alone estimated their losses at up to $141 million--or where the money is.

Reiners, claiming to be Philip Morris Cos.’ chief operating officer, said the money would be used to lease computers for research into “future cigarette alternatives”--a venture he said was called “Project Star” and would have to be conducted offshore for privacy reasons, according to the FBI.

Before leaving Philip Morris in 1992, Reiners had done business with one of the bank officials allegedly scammed.

Banking experts said the case suggests that banks may be lax in security when dealing with what they believe are representatives of Fortune 500 companies.

“When you have an established reputation like Philip Morris, they know Philip Morris,” said Charles Meiburg, who teaches commercial lending management at the University of Virginia’s graduate business school. “They probably aren’t as careful in checking those things.”

According to the FBI, institutions including Signet Bank, NationsBank, CoreStates, Bank of Montreal, Hitachi American Credit, Credit Andstaldt and Long Term Credit Bank of Japan approved loans totaling $323.5 million.

Last week, the Japanese bank questioned a loan document, and the other banks became suspicious. When bankers called Reiners, the FBI alleged, he had Bachiman pose as a Philip Morris official on the phone.

NationsBank of Charlotte, N.C., which agreed to extend $64.5 million in credit last year, said it had discovered apparently fraudulent documents on Friday, investigated and referred the case to the FBI on Sunday.

Signet said it lost $81 million, and NationsBank spokeswoman Lynn Drury said the bank could lose up to $60 million.

Bachiman’s lawyer, Suzanne Brody, said her client is innocent and was duped by Reiner. It was not known how Bachiman and Reiners knew each other.

Reiners’ attorney, Dominick Porco, did not return calls for comment.