O.C. Man Faces Investment Fraud, Tax Charges

A Mission Viejo man who raised $800,000 from investors to revive America’s first motorcycle brand used the money instead to buy luxuries like a Ferrari, a Rolex watch and fur coats, prosecutors alleged Friday.

Philip Zanghi II, 50, was arrested Friday in a New York hotel on an indictment charging him with securities fraud, tax evasion and money laundering, the Justice Department and Internal Revenue Service said.

The indictment, unsealed Friday in federal court in Springfield, Mass., accused Zanghi of selling bogus preferred stock in the Indian Motocycle Co. to investors from Aug. 13, 1990, through Aug. 27, 1992.

He had promised to build a plant to resume production of the classic motorcycles that were last made in 1954 at a teepee-shaped plant in Springfield. Zanghi allegedly misled investors by telling them the company’s shares were registered with the Securities and Exchange Commission and soon would be trading on a public exchange.

“Zanghi defrauded investors who sought to catch a ride on a new Indian Motocycle Co. and used the proceeds of the bogus stock to fund his luxurious lifestyle,” said U.S. Atty. Donald K. Stern.

In addition to charges he used investor money to buy cars, jewelry and furs, Zanghi is accused of giving $42,000 of the funds to his daughter and putting more than $350,000 in his own bank account.

If convicted, Zanghi faces a maximum sentence of 155 years in prison and $15.75 million in fines.

The company, which spelled motorcycle without the “R,” was founded in 1901 by engineer Oscar Hedstrom and high-wheel bicycle racing champion George Hendee.

Within a few years, Indian racers were hitting speeds of 100 mph, and the downtown Springfield plant was the largest motorcycle maker in the world. More than 30,000 of the bikes remain on the road.

Of the dozens of American motorcycle companies that followed Indian, only archrival Harley-Davidson survives.