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BEHIND THE NEWS: Former Brightpoint worker gets boost from defender

May 1, 2006

B r i g h t p o i n t Inc.'s former director of risk management, Timothy Harcharik, doesn't have a high-powered legal defense team. His federal public defender, James McKinley, is accustomed to representing people accused of drug crimes, not those charged with participating in a multimillion-dollar accounting fraud.

But McKinley has done right by Harcharik so far.

On April 20, federal Judge Larry McKinney of Indianapolis dismissed the indictment against Harcharik, siding with McKinley in a months-long battle over whether federal prosecutors brought their case in the proper legal venue.

A federal grand jury in Indianapolis last fall indicted Harcharik on an obstruction-of-justice charge. Investigators say he provided false testimony about accounting transactions four years ago during meetings with the U.S. Securities and Exchange Commission in New York City.

McKinley seized on that locale, pointing out that the U.S. Constitution and federal rules require that prosecutors bring their cases in the same federal district where they say the crime occurred-in this case, the Southern District of New York, not the Southern District of Indiana.

So is Harcharik, 51, off the hook? It's not yet clear. Investigators could seek a new indictment from a grand jury in New York. Or they could seek to transfer the existing case there, or to appeal McKinney's decision. They even could decide to abandon the matter.

"I can't say what is going to happen here," said Winfield Ong, an assistant U.S. attorney in Indianapolis. "A lot of that would depend on what the U.S. Attorney's Office in New York wanted to do."

Harcharik is one of two former Brightpoint employees charged last fall in what investigators say was a 1998 scheme to hide more than $11.9 million in cost overruns stemming from the closing of a United Kingdom unit.

They say the Plainfield-based wholesaler of wireless phones bought a sham insurance policy from New York-based American International Group that allowed it to spread out those losses over several years instead of reporting them all at once.

The other defendant, former Chief Accounting Officer John Delaney, last fall agreed to plead guilty to securities fraud in return for receiving a prison sentence of no more than 18 months. Delaney, 40, faces sentencing in July.

However prosecutors proceed, Harcharik's legal woes won't be over. The SEC three years ago filed a civil lawsuit against him over the same matter. It remains pending. Other targets of the SEC investigation settled-Delaney for $100,000, Brightpoint for $450,000, and AIG for $10 million.

Sayonara to Signature

Atlanta-based Jameson Inns Inc. threw a party last week to celebrate the conversion of four Signature Inns here to the Jameson brand.

You could forgive some Signature Inns alums if they don't see much to celebrate.

Signature was an Indianapolis-based public company until 1999, when Jameson scooped it up for more than $100 million. At the time, Signature operated 25 Midwestern hotels. At its peak, it had 32.

Signature's former executives, who could not be reached for comment, founded the company in 1978 and dreamed of creating a lodging powerhouse. But rapid expansion in the 1980s led to a Chapter 11 bankruptcy, and performance sputtered through the '90s.

Now, Jameson is renovating the former Signature Inns and converting them to its flagship brand, which has more than 100 locations. And it's seeing impressive results. Converted hotels in other markets have posted revenue increases of 20 percent.

In Indianapolis, Jameson is spending $8 million to convert the four Signatures that are the best performers. It sold the other two-the location at Interstate 465 and Michigan Road is now a Days Inn and the one at I-465 and East Washington Street is now a Crossroads Inn.

Who'll bag Parisian?

The Parisian department stores at Circle Centre and The Fashion Mall at Keystone at the Crossing will have a new owner-and perhaps a new moniker-within months.

Alabama-based Saks Inc. put the 39-store chain on the block in January. Women's Wear Daily says suitors include former Saks executive George Jones, who is teaming on a bid with the Los Angeles-based investment firm Freeman Spogli; and North Carolinabased Belk Inc., the nation's biggest privately held department store chain.

Jones, who used to oversee Parisian, wants the entire chain, while Belk wants only certain locations, according to WWD. Belk previously has converted acquired chains to the Belk name. Last year, it did so after buying Proffitt's and McRae's from Saks.
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