United States Attorney Southern District of New York
For Immediate Release September 14, 2000	Contact:	U.S. ATTORNEY'S OFFICE MARVIN SMILON, HERBERT HADAD PUBLIC INFORMATION OFFICE (212) 637-2600 CYNTHIA DUNNE (914) 993-1913 KARL METZNER (914) 993-1920

MARY JO WHITE, the United States Attorney for the Southern District of New York, announced that ROBERT J. MCCARTHY, former Chief Operating Officer of Lloyd's Shopping Centers, Inc. (�Lloyd's�) of Middletown, New York, was sentenced yesterday in White Plains federal court to six and a half years in prison for the theft of approximately $2.1 million from the Lloyd's Employee's Pension Plan and the Lloyd's Employee's 401(k) Savings Plans.

United States District Judge BARRINGTON D. PARKER, Jr. also ordered MCCARTHY to make $1.6 million in restitution to the Pension Benefit Guaranty Corporation, the United States agency which insures pension plans. The employee 401(k) plans previously were replenished by Lloyd's Shopping Centers, Inc.

On October 13, 1999, following a 10-day trial before Judge PARKER, a jury found MCCARTHY guilty of three counts of theft of retirement funds, and 18 counts of money laundering, for the subsequent financial transactions involving the proceeds of the thefts. In addition, MCCARTHY was convicted for his role in the distribution and maintenance of false earnings statements to the participants of the 401(K) plans.

According to the proof at trial, in 1994 Lloyd's was in bankruptcy and retained MCCARTHY, a C.P.A., for financial consultation. On December 6, 1994, a written agreement was executed whereby MCCARTHY gained control of Lloyd's and the right to an employment contract, subject to Lloyds emergence from bankruptcy and other terms. Lloyd' s emerged from bankruptcy on December 28, 1994.

According to the proof, from January through December of 1995, MCCARTHY embezzled a total of $2.1 million from Lloyd's Pension and 401(k) Plans. He used the stolen retirement monies to pay down a mortgage held by Fleet Bank on Lloyd's property in Newburgh, to pay Lloyd's other corporate debts and to purchase medical equipment in order to start a new company he was forming with others, named Med Ox technologies. MCCARTHY'S thefts of pension and 401(K) funds left both funds effectively bankrupt.

At trial, Lloyd's employees testified that in response to their inquiries, MCCARTHY falsely told them that their retirement savings had been moved into new funds where they were making higher earnings.

MCCARTHY was also convicted of the theft of $402,000 from the bankruptcy estate of a New Jersey corporation, Discount Harry, Inc. According to the testimony at trial, in 1994 MCCARTHY was the disbursing agent for the Committee of Unsecured Creditors in the bankruptcy proceeding of Discount Harry, Inc. and was entrusted with $420,000, which was supposed to be disbursed to Discount Harry's creditors. Instead, MCCARTHY transferred the funds into his own personal account, and then used Discount Harry's money to pay Orange County approximately $402,000, to extinguish a tax lien which stood in the way of Lloyd's emergence from bankruptcy.

Ms. WHITE praised the Department of Labor, Pension and Welfare Benefits Administration and the Office of Inspector General, and the Internal Revenue Service for their investigative efforts in this case.

Assistant United States Attorneys CYNTHIA DUNNE and KARL METZNER are in charge of the prosecution.