A federal grand jury in Baltimore yesterday indicted the president of a Pikesville leasing business that allegedly defrauded investors of millions of dollars between 1985 and 1987.
Charles A. Oglebay 3rd, president of Governmental Financial Services, was indicted on 17 counts of mail fraud for allegedly selling leases and promissory notes and then reselling the same leases and promissory notes to USF&G Corp.
GFS leased various types of small equipment and energy-saving equipment to municipal governments and businesses and then -- through a subsidiary company known as GFS Leasing -- would sell to individual
investors interests in the leases, according to the indictment.
Investors could buy a variety of instruments, including entire leases, an interest in a group of leases or an unsecured promissory note. If they purchased a lease or an interest in a pool of leases, their interest was supposedly collateralized by the equipment that was being leased, according to the indictment.
Investors were promised returns of between 10 and 16.5 percent annually. According to the indictment, one investor, Robert L. McNeill Jr. of Wyndmoor, Pa., lent GFS $2 million to obtain title to GFS equipment leases. Some time after Mr. McNeill purchased those leases, GFS Leasing
sold the same leases, along with others, to USF&G through an intermediary, the indictment said.
After selling Mr. McNeill's interest to USF&G, GFS allegedly failed to pay Mr. McNeill for his ownership interest. Instead, the indictment alleges, GFS continued to pay Mr. McNeill monthly payments as if he still owned the leases.
As a result, the original investors reportedly lost a substantial amount of money, but the indictment did not specify how much.
Mr. Oglebay's company filed for bankruptcy in December 1987.
If convicted of the charges, Mr. Oglebay faces a maximum penalty of five years in prison and a $250,000 fine for each of the 17 counts.