Adviser indicted in money scheme

The Clearwater man is accused of scamming investors out of $9.9-million.

By CHRIS TISCH
© St. Petersburg Times
published March 29, 2002

CLEARWATER -- A Clearwater financial consultant has been 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 earlier this month 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, Philip Galanis, also is 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 a member of parliament in the Bahamas before he stepped down in January, citing that he could not fully dedicate himself to the office, according to published reports from the Bahamas.

Galanis is not named in the Kubany indictment, which was filed in Tampa federal court.

Kubany, who is free on bond, could not be reached for comment Thursday.

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.

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