Alderdice, James - IGBE Fraud Gets 10-year Fede...

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James Alderdice - Gold Bullion Fraud Gets 10-year Federal Prison Term

April 13, 1985

By Kathleen Pellegrino, Staff Writer


James Alderdice was sentenced Friday to 10 years in federal prison, the last and most severe penalty he has received for his role in the $75 million collapse of the International Gold Bullion Exchange.

``The enormity of the fraud really can only be described as outrageous. It is impossible for me to consider anything but the maximum,`` said U.S. District Judge James Paine, who also imposed an $11,000 fine and ordered Alderdice to make $227,000 in restitution.

The sentence stunned Alderdice, who immediately turned to his attorney and whispered through gritted teeth. His two sisters and mother sobbed loudly.

``No! No!`` his sister Dana shouted as she jumped from her seat.

Defense attorney Thomas Sclafani said he, too, did not expect Paine to impose the maximum allowed by a plea-bargain agreement Alderdice made March 7.

``We`re obviously very unhappy,`` Sclafani said in a hallway outside the West Palm Beach courtroom, where the Alderdice family huddled and wept. ``His sentence is way of line from the others.``

In New York on Monday, Alderdice was sentenced to five years. In Broward Circuit Court on Wednesday, he was sentenced to six years. Judges in both cases agreed that the sentences could be served in federal prison at the same time Alderdice served his sentence in the federal case.

Alderdice pleaded guilty March 7 to two federal charges of mail fraud. He will probably spend between 52 and 64 months in prison before he is eligible for parole, Sclafani said. Paine recommended a minimum security prison and allowed Alderdice to remain free until he is ordered to report to prison by the U.S. Marshals Service.

At Friday`s sentencing, Alderdice, 28, told Paine he was sorry for the losses left by the company, formed by Alderdice and his brother, William, 40.

``I am extremely sorry that I did not exert a firmer hand on my brother,`` Alderdice said. ``I only wish I had $8 (million) or $10 million. I would give every penny to the creditors.``

By most accounts, Sclafani told Paine, the elder Alderdice ``called the shots`` and made all the business decisions. William Alderdice, while awaiting trial on the charges, was killed by an ex-convict he and his brother had befriended.

Sclafani reminisced for Paine about the early days of the company, when it moved into a modern downtown Fort Lauderdale office building and William Alderdice accepted keys to the city and county from government officials.

``The reason for the extension of that honor was because the International Gold Bullion Exchange had become an overnight success story,`` Sclafani said.

William Alderdice boasted that someday the firm would be the largest precious metals dealership in the world.

Sclafani compared the collapse, which left 23,000 creditors with losses, to the downfall of any major corporation or bank.

``I find that somewhat intriguing,`` prosecutor Elizabeth Jenkins said. ``I have never heard of major corporations having gold-painted blocks in their vaults.``

When IGBE closed its doors at One Corporate Plaza in April 1983, wooden blocks painted gold were found in a vault that was supposed to be stocked with precious metals.

``There was a substantial fraud. There were numerous victims deprived of their life savings,`` said Jenkins. ``We believe (Alderdice) should be punished accordingly.``

The investors are fighting for their money in bankruptcy court in Miami. The trustee for the bankruptcy and Alderdice`s attorneys have said that the only chance for reimbursement or restitution is if a gold mine the company still owns in Alaska can be activated.

As the Alderdice family was preparing to leave the courthouse Friday, Dana Alderdice paused between sobs, looked skyward and said with a moan, ``Bill, how did you let this happen?``