A federal grand jury in Las Vegas has accused controversial Whittier oil millionaire Jack R. Urich and six other men of fraudulently juggling millions of dollars among commercial accounts in a dozen banks here and in Hawaii, Canada and Mexico in an elaborate check-kiting scheme.
The 52-count indictment alleged that the seven conspired with the late Joseph V. Agosto, a reputed organized crime figure, to carry out the scheme. The charges came after a 2 1/2-year FBI investigation.
The defendants' scheme resulted in the demise of Las Vegas-based Mineral Bank of Nevada and in a loss of more than $1 million to San Francisco-based Crocker National Bank, the indictment charged.
The check-kiting practice, the indictment said, causes balances of bank accounts to be "artificially and unlawfully inflated by the coordinated exchange of non-sufficient funds checks between bank accounts." The result, it said, is that the account holders receive the unauthorized use and benefit of monies belonging to the banks and exposing the banks where the accounts are located to potential loss.
Defendants have not yet been arraigned on the charges of conspiracy and wire fraud, which were filed last Wednesday. They include two former bank officers, Richard Fenner and James Whetton. Other defendants are Nicholas Tanno, Donn Smithe, Aref Hanif and Jaime Zurcher.
Urich, 51, whose father founded Whittier-based UCO Oil Co., has often been in the public spotlight since 1977, but the indictment is the first time that criminal charges have been filed against him. He surrendered voluntarily after the indictment was returned and is currently free on bond.
The Las Vegas indictment said the alleged scheme ran from Sept. 29, 1981, to May 1, 1984, and much of the 42-page document traces transactions in Urich-related accounts that were allegedly authorized by him.
Los Angeles attorney Stanley Greenberg, who represents Urich, said Tuesday that his client "apparently was used by Mr. Agosto as a sort of unwitting helper in Mr. Agosto's check-kiting scheme." Urich did not know of the scheme or profit from it and "didn't need the money," said Greenberg, who added: "I fully expect him to be exonerated at trial."
Rejected for License
Urich was a central figure in one of the most controversial casino licensing cases of the 1970s, involving his unsuccessful attempt to invest $6 million in the Tropicana on the Las Vegas Strip. His relationship with Agosto was one of the reasons casino regulators cited when they refused to license Urich.
In 1983, as a protected federal witness, Agosto testified that he worked with reputed Kansas City organized crime chief Nick Civella to skim gambling proceeds at the Tropicana in the 1970s. Agosto, then 61, died of an apparent heart attack shortly after the jury convicted six men in the skimming trial.
Urich again hit the news after furnishing his plane to Mayor Tom Bradley in the closing weeks of the mayor's unsuccessful 1982 campaign for governor, then in the aborted investigation of him by Los Angeles police and the federal Organized Crime Strike Force here. Subsequently, Urich sued the law agencies for $100 million, a case Greenberg said Tuesday has been settled. He said the terms were confidential.
Urich-related transactions cited in the Las Vegas indictment include more than $5 million allegedly moved, by check or wire transfer, to various other bank accounts of the defendants at Urich's direction from a UCO Inc. account at a Bank of America branch in Whittier.
$3.9 Million Listed
In one six-day period in October, 1982, a total of $3.9 million was listed in the indictment as having been transferred by wire from the Bank of America account to Mineral Bank via Crocker Bank, which served as Mineral's correspondent bank for wire transfers of funds.
Three of the wire drafts were for $1 million, another was for $500,000 and another for $400,000, the indictment said. Corresponding amounts from various defendants' accounts were deposited in the UCO Inc. account as part of the alleged kite, it said.
The indictment alleged that Urich "knowingly" permitted Agosto to use the bank account in Whittier "to perpetrate the check-kiting scheme by authorizing the use of UCO Inc. funds for wire transfers and the purchase of cashier's checks" payable to other defendant-related accounts.
It also alleged that Urich authorized the use of UCO Inc. funds to buy certificates of deposit at Mineral Bank and at Banco Internacional, "an international bank doing business in Mexico and the Grand Cayman Islands, for the purpose of ensuring" that Agosto and the other defendants could carry on the scheme.
Urich "furthered the check-kiting scheme," the indictment added, "by using the economic influence and reputation of UCO Inc. to induce" Wells Fargo Bank and Bank of America to open accounts for other defendant-related companies involved in the alleged kite.
The indictment listed only Mineral and Crocker as "victim financial institutions" in the case.