Ex-Chief of Software Company Sentenced in Fraud Case

In the largest case of fraud stemming from the Northridge earthquake, the former president of a San Fernando Valley software company was sentenced to more than four years in prison for ordering his employees to destroy software products he later claimed had been damaged in the temblor, officials said Thursday.

Irwin Bransky, 47, the former chief executive of Van Nuys-based Kenfil Distribution, instructed as many as 40 of his employees to damage packaged software in the days after the Jan. 17, 1994 quake, said Assistant U.S. Atty. Aaron Dyer.

Bransky, of Encino, then filed a phony insurance claim for more than $5 million, Dyer said.

Former employees said the scheme included stomping, trampling and “playing baseball” with obsolete and slow-selling computer software products. The firm, which had been the second-largest computer software distributor in the United States, received more than $840,000 for the damage from the RLI Insurance Co. before the fraud was discovered.

“It’s still amazing to me that they were so blatant about defrauding the insurance company,” Dyer said. “The employees who testified described it almost as a party atmosphere . . . and it went on for two days.”

U.S. District Judge J. Spencer Letts sentenced Bransky on Wednesday to four years and three months in federal prison for orchestrating the scheme. In addition, Letts ordered Bransky to pay $840,000 in restitution and a $12,000 fine.

Nelson Landman, 59, vice president of Kenfil, was sentenced to prison for one year and a day for his role in the scheme. Landman, who lived in the City of Industry at the time of the earthquake but has since moved to Scottsdale, Ariz., was ordered to pay $20,000 in restitution.

Both Bransky and Landman pleaded guilty to federal mail fraud charges in June 1997 in an eight-count indictment that outlined the four-month scheme to swindle the insurance company.

Bransky’s attorney, Richard Marmaro, could not be reached for comment.

Dyer said Kenfil had been facing financial difficulties in the months before the Northridge earthquake. Two of the company’s warehouses were overstocked with software that it could not sell to retailers such as CompUSA and Egghead Software. In addition, he said, Kenfil was about to lose its biggest account.

After the quake, Kenfil’s main warehouse in Van Nuys sustained minor damage, mostly software thrown from shelves. But after surveying the damage, Bransky and Landman concocted the scheme and told employees to go on a wrecking spree so the damage could be reported on an insurance claim.

Employees were directed to “jump on packages and bend them with their hands,” Dyer said.

Others damaged goods by “driving forklifts over products and playing baseball with packages,” Dyer said. Bransky also told employees to bring out-of-date software from a second warehouse so those products could be destroyed as well.

An FBI investigation was launched after former employees tipped authorities in 1995, Dyer said.

Shortly after the earthquake, Kenfil was taken over by Ameriquest, an Orange County-based software company.