2 Executives Accused in Quake Fraud

VAN NUYS — The former president and vice president of a large computer software company were indicted Thursday on federal mail fraud charges that accuse them of ordering employees to trample, stomp on and bend stock after the Northridge earthquake in an attempt to swindle an insurance company out of $5 million.

The indictment is the largest fraud case related to the Jan. 17, 1994, Northridge earthquake, federal authorities said.

The eight-count federal indictment accuses Irwin Bransky, 45, former president and chief executive officer of Kenfil Distribution Inc., and Nelson Landman, 59, of operating a four-month scheme to defraud RLI Insurance Co. into paying for nonexistent quake damage, said Aaron Dyer, an assistant U.S. attorney prosecuting the case.

Each man could face as many as 40 years in federal prison and a $2-million fine and could be ordered to repay the insurance company $840,000, Dyer said.

“It’s another effort to try to crack down on fraud” resulting from false claims after the quake, Dyer said.

Kenfil, then the second-largest software distribution company in the country, was based in Van Nuys at the time. Since the company was taken over by another firm, Landman, who had an address in the city of Industry, has moved out of state, authorities said. Bransky still lives in Los Angeles.

The indictment “was not unexpected,” said Richard Marmaro, Bransky’s attorney. He said Bransky “intends to defend the case vigorously and expects to prevail at the trial.”

Landman’s lawyer could not be reached for comment.

The indictments are the result of a months-long investigation started by the FBI after the agency was tipped off by former employees of the company, authorities said.

According to the five-page document, Kenfil--which had three Los Angeles warehouses, including two in Van Nuys--was facing financial difficulties during the months preceding the quake.

Its financial woes included overstock that it could not sell to retailers such as CompUSA and Egghead Software, as well as a threat from the maker of WordPerfect to cancel its account, according to the document.

Dyer said the quake presented a perfect opportunity for Bransky and Landman to solve their financial problems by filing a false claim with RLI, an out-of-state company with a local office in Brea.

Most of the minor damage to the company’s inventory consisted of software knocked off the shelves at its main warehouse in the 16700 block of Saticoy Street, Dyer said.

In the days after the earthquake, however, Landman coordinated the destruction of “substantial amounts of software by instructing employees to jump on the packages and to bend them with their hands,” according to the indictment.

Bransky and Landman also ordered employees to bring software from the other two warehouses to be destroyed at the Saticoy facility, authorities said.

The letters containing the false claims and requesting payments were mailed to the insurance company from Jan. 18, 1994, through May of that year, Dyer said.

“The actual damage was significantly less than 5 million,” Dyer said.

Arraignments for the two men at the federal court in downtown Los Angeles are pending.