A Blue Bell executive who helped run a now-bankrupt children's clothing company was convicted yesterday of federal fraud and false-statement charges. Prosecutors said the lies had triggered bank losses of $35 million.
Joseph J. Connors, 50, was chief financial officer of Kleinert's Inc., which was founded in 1869 in New York and later headquartered in Plymouth Meeting. The 1,000-employee firm went bankrupt in 2003.
The jury found that Connors, a certified public accountant who worked for the company for 20 years, misled three banks about inventory and revenue to secure and maintain more than $68 million in loans. To pull off the fraud, prosecutors said, Connors directed company salespeople to generate phony bills.
According to a court filing, defense lawyer Glenn A. Zeitz told jurors that Connors had acted in good faith - that Connors had not embezzled any money and had done everything in the interest of preventing bankruptcy and saving jobs. Zeitz could not be reached for comment after the verdict.
The victims were Wachovia, National City, HSBC and Fleet Banks.
The jury and U.S. District Judge John R. Padova heard evidence in Philadelphia for four weeks. Deliberations began Wednesday. Connors likely faces at least nine years in prison under the advisory federal sentencing guidelines, Assistant U.S. Attorney Louis S. Lappen said.
Two other Kleinert's executives were charged in the case. Former president Jay Andrews and vice president Richard Shaffert pleaded guilty last year. They face three to four years when sentenced, Lappen said.