Canadian Pair Charged in U.S.

8 March 2000
A pair of Canadians whose company gambled on hitting it rich in the lottery business have been charged with stealing $32 million (U.S.) from an American bank.

Jack Banks, 51, and Larry Weltman, 37, were arrested Friday in New York. They are charged with first-degree grand larceny and scheme to defraud.

Banks is chief executive, and Weltman chief financial officer, of - a company that was known as Laser Friendly Inc. when it set up shop in Scarborough in the '90s.

It won contracts to print lottery tickets for Ontario Lottery Corp.

Since then it has forged business links in the United States and Gibraltar, where Banks maintains a home.

Both men remain in jail, unable to raise eye-popping bail, set at $35 million for Banks, who says he has homes in Ontario, Gibraltar, Israel and Florida.

Bail has been set at $3 million for Weltman, who lives in Thornhill.

New York prosecutors said was using the Laser Friendly name when it acquired a lottery printing firm in Washington. borrowed $32 million from Coutts & Co., a private banking unit of National Westminster Bank PLC, using Laser Friendly stock as collateral.

According to prosecutors, the bank was not told that Laser Friendly lacked the licenses and regulatory approval it needed to do business in Washington. Coutts lost $28 million, the equivalent of $41 million (Canadian) on the loan.

Laser Friendly had grand plans when it was profiled in The Star in 1995. Sales that year were projected to hit $60 million and plans were afoot to expand to the United States where, the freelance author wrote, ``Americans are a couple of steps behind Canada when it comes to lottery expertise.'

The firm changed its name to, bought companies in the U.S. and got a listing on the Nasdaq exchange.

The company planned to expand into Internet gambling as well, but all did not go smoothly.

Last October, admitted that it was late in setting up planned web sites for gamblers in six languages.

Its most recent financial report reflected its struggles.

For the six months ended July 31, 1999, the company said it lost $2.9 million on revenue of $1.3 million. That at least was an improvement from the previous year, when revenue was zero and losses totaled $22.2 million for the same period.

It was also defending itself against a class action suit launched by investors.

In December, it was taken over by a Gibraltar firm called Ostel Management Inc.'s shares were delisted from Nasdaq, last trading at $1.47, down from as high as $17 during the previous year.

Banks and Weltman were arrested when they arrived in New York last week to defend the investors' lawsuit, which was about to go to trial after mediation efforts had broken down.

Reprinted with permission - The Toronto Star Syndicate. With wire service files.