A Clearwater financial consultant was indicted on federal charges that he was involved in a fraudulent investment scheme in which investors lost $9.9-million in the mid 1990s.
A federal grand jury indicted Richard M. Kubany in 2002 on charges of conspiracy and tax evasion.
Kubany, 60, was involved in the Lauriel Investment Program, a fraudulent investment scheme, from 1995-98, according to the indictment.
The program took in $9.9-million from investors starting in late 1995, with the promise of a high yield at little or no risk. Others involved in the scheme agreed to give Kubany more than $1.25-million in finder’s fees for funneling investors’ money into the program, the indictment charges.
But by late 1996, all the investors’ money had been dissipated, including $3.1-million that went through Progressive Growth Management Limited, a Bahamian corporation created and controlled by Kubany, the indictment states.
The indictment indicates a lawyer from Los Angeles, an accountant from Phoenix and another man from Colorado also were involved. It does not say how many investors lost money in the scheme or where they lived.
Kubany and those men, along with Progressive and Lauriel, are named as defendants in a lawsuit filed by the federal government in Arizona. That lawsuit alleges investment fraud under the Racketeering Influenced and Corrupt Organizations (RICO) Act.
Another man, current Bahamian Senator Philip Galanis, was also named as a defendant in that lawsuit.
Galanis is a former managing partner of the accounting firm Ernst & Young who was fired in 1997. He was suspected of raising money under false pretenses and diverting it for the personal use of insiders rather than for legitimate investing, according to OBNR, an Internet newsletter that follows offshore financing.
Galanis was allegedly escorted off the premises of the firm that he worked for.
Galanis was a member of parliament in the Bahamas before he stepped down in January, 2002, citing that he could not fully dedicate himself to the office, according to published reports from the Bahamas.
The money that went through the offshore account was used for, among other things, Kubany’s personal expenses, the indictment states.
Kubany claimed the money he received from Progressive were loans so he wouldn’t have to pay taxes, the indictment states. Kubany also is charged with not filing income tax returns for 1995 and 1996.
