Man Sentenced for Filing False Damages Claim

In the largest case of fraud stemming from the Northridge earthquake, the former president of a San Fernando Valley software company was sentenced to 51 months 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 Inc., instructed as many as 40 of his employees to damage packaged software in the days following the Jan. 17, 1994, quake, said Assistant U.S. Atty. Aaron Dyer, and then filed a phony insurance claim for more than $5 million.

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 country, received more than $840,000 for the damage from RLI Insurance before the damage was discovered to have been intentional.

“It’s still amazing to me that they were so blatant about defrauding the insurance comany,” said Dyer. “The employees who testified described it almost as a party atmosphere of jumping on the goods, 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, Judge Letts ordered the Encino man to pay $840,000 in restitution and a $12,000 fine.

Nelson Landman, 59--vice president of Kenfil--was sentenced to prison for 12 months and a day for his role in the scheme. Landman, who lived in the City of Industry at the time of the earthquake, but now lives in 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.

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 it could not sell to retailers such as CompUSA and Egghead Software.

After the quake, Kenfil’s main warehouse in Van Nuys suffered minor damage--mostly software thrown from shelves. Bransky and Landman concocted the sabotage 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,” said Dyer.

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 Bransky also told employees to bring out-of-date software from a second warehouse so those products could be destroyed as well.

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

The prosecution arose as a result of an FBI investigation after former employees tipped off officials in 1995, Dyer said.

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