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Spokane, Washington  Est. May 19, 1883

Ex-Tobacco Employee Pulls Massive Loan Scam Banks Extend $323 Million In Credit For Fake Offshore Project

Associated Press

Posing as a Philip Morris executive, a former employee of the tobacco giant spun a fantastic tale of a top-secret, offshore cigarette research project to secure $323 million in loans from at least six banks, the FBI says.

Edward J. Reiners, 51, of Somers, N.Y., and his alleged accomplice, Judy Rose Bachiman, a 38-year-old secretary from Cliffside Park, N.J., were arrested Tuesday on bank fraud charges.

The FBI said Reiners and Bachiman used Philip Morris stationery and posed as executives of the food, tobacco and real estate company when applying for the loans, succeeding in part because of Philip Morris’ healthy credit rating.

It was not immediately known how much they actually borrowed or where the money is.

Reiners, claiming to be Philip Morris’ chief operating officer, said the money would be used to lease computers for research into “future cigarette alternatives” - a venture he said was called “Project Star” and would be conducted offshore for privacy reasons, according to the FBI.

Before leaving Philip Morris in 1992, Reiners had done business with one of the bank officials scammed.

Banking experts said the case suggests that banks may be lax in security when dealing with what they believe are Fortune 500 companies.

According to the FBI, institutions including Signet Bank, NationsBank, CoreStates, Bank of Montreal, Hitachi American Credit, Credit Andstaldt and Long Term Credit Bank of Japan approved loans totaling $323.5 million.

Last week, the Japanese bank questioned a loan document, and the other banks grew suspicious. When bankers called Reiners, the FBI alleged, he had Bachiman pose as a Philip Morris official on the phone.

NationsBank of Charlotte, N.C., which agreed to extent $64.5 million in credit last year, said it discovered apparently fraudulent documents on Friday, investigated and referred the case to the FBI on Sunday.

Signet said it had lost $81 million, and NationsBank spokeswoman Lynn Drury said it could lose up to $60 million. But both banks said the FBI should be able to recover much of the money.