Former UPI Owner Indicted p. 9

By: Debra Gersh Hernandez

U.S. Attorney's office in Los Angeles alleges that
Earl W. Brian used 'fraudulant transactions' to
conceal the dire financial conditions of his companies sp.

FORMER UNITED PRESS International owner Earl W. Brian allegedly wove quite a tangled web in an effort to conceal the dire financial conditions of his companies from stockholders and banks, according to a federal indictment.
Brian and other officers of his Infotechnology and its then-subsidiaries, Financial News Network and United Press International, have been accused of fabricating payments to FNN from UPI and other companies, and falsely inflating FNN's income to show profits where actually there were losses.
The U.S. Attorney's office in Los Angeles announced the 24-count indictment, which charges Brian and John F. Berentson, a former executive at Brian's Infotechnology and its subsidiaries, FNN and UPI, with conspiracy, bank fraud, securities fraud, making false statements to the Securities and Exchange Commission, and making false statements to the accountants of a publicly-traded company.
Also charged with conspiracy, but not indicted by a grand jury, were former FNN CFO C. Steven Bolen, who also was charged with securities and bank fraud; former UPI CFO Gary A. Prince, who also was charged with making false statements to the SEC; and former FNN controller Mitchel H. Young.
Bolen and Prince pleaded guilty to the charges on Sept. 5, and Young pleaded guilty following his arraignment on Sept. 11.
Brian and Berentson are slated to be arraigned on Oct. 2 in Los Angeles. Bolen, Prince and Young are scheduled to be sentenced on March 25, 1996.
Brian's attorney, Richard Marmaro, did not return a call for comment, but he was quoted as saying, "We are confident the government will not be able to prove the charges, because there is no truth to them."
He told another reporter the case had "no merit" and the charges were "unsupported by the facts."
"We have no comment at this stage," Berentson's attorney, Mark Beck, of Beck Decorso Barerra & Oh in Los Angeles, told E&P. He added that they anticipate the case will proceed to trial.
According to the federal indictment, from mid-1988 to early 1991, Brian and Berentson falsely inflated FNN's income by about $49 million, supposedly through inter-company billings.
The action was taken, the indictment charged, "to make the company appear profitable in the financial statements it provided to the lending banks, the SEC and the investing
public."
In addition, Brian and Berentson allegedly entered FNN into some $72 million in fraudulent lease transactions involving equipment that did not exist or that was sold to more than one company.
The proceeds of those "fraudulent transactions" were used "to fund payments from UPI and another Infotech company to FNN, to make it appear as if FNN were actually earning the income it reported on its financial statements," the indictment charged.
Brian also was accused of secretly misappropriating $300,000 of those lease proceeds for his personal benefit.
Among the specific actions outlined in the indictment:
? Approximately $29 million in charges recorded by FNN from UPI for use of a technology called vertical blanking interval (VBI) were "arbitrary and inflated figures" that were "calculated simply by determining the amount of additional income required for FNN to record the desired amount of profit for each quarter," according to the indictment. Further, UPI "had no ability to pay" FNN unless Brian, Berentson and their coconspirators "provided UPI with the money."