Federal Jury Convicts Abrams, Other Mego Executive in Fraud Trial
NEW YORK- A Federal Court jury last month convicted Marty Abrams, chairman of Mego International, and Leonard Siegal, Mego's vice-president and former general counsel, on assorted charges in a complex fraud and obstruction-of-justice trial.
After four days of deliberations in the seven-week trial, the jury also acquitted three other defendants: former Mego officers Fred Pierce and Michael Gold and a New Jersey trucking official Irving Cotler, who did business with Mego.
Abrams and Siegel, who remained free on bail pending scheduled sentencing early this month, said they would appeal the verdict.
The Federal charges against Abrams contended that he had defrauded Mego and its stockholders in transactions stemming from the sale of inventory. The Government contended that Abrams and several former Mego officers "secretly misappropriated" more than $100,000 over ten years "to enrich themselves and bribe others."
Abrams was convicted on 15 counts of wire fraud, one count of obstruction of justice and one count of false filing of Federal corporate income tax returns. The wire fraud and obstruction charges are the most serious, and carry maximum prison sentences of five years each.
Siegal was also convicted on the wire fraud and false-filing counts.
FINANCING IS APPROVED
The charges involved in the case were unrelated to Mego's filing of a Chapter 11 petition in June, seeking court protection while the company attempts to reorganize.
Shortly before the end of the trial, Mego announced that the bankruptcy court had approved a previously detailed financing plan offered by General Electric Credit Corporation. It calls for up to $8 million in new advances, secured by receivables and inventories, through next March 1, and for the issuance of stock-purchase warrants to the lender.
The warrants, if exercised, along with those already held by GECC, would give the latter the right to buy an aggregate 7.5 percent of Mego's common stock at 5O cents a share. In addition, the agreement obliges Mego to meet the requirements of a new business plan. The plan is reported to include a provision for an employment contract for Abrams running through February 1986.
When asked whether Abrams' conviction might jeopardize the financing agreement in any way, a GECC spokesman commented that "his problem seems unlikely to have any impact on the day-to-day conduct of Mego's business, and is therefore not relevant.".