Former CEO used company loans to cover gambling debts

CHARLOTTE, N.C. (AP) - A former corporate executive accused of using company money and bank loans to cover more than $30 million in gambling losses has agreed to plead guilty to bank and wire fraud.

Under a plea agreement filed Wednesday, Carl L. Mosack, the former president and CEO of Conbraco Industries Inc. of Matthews, will serve two years in a federal prison and forfeit his interest in some real estate holdings.

Federal prosecutors say that during a one-year period in 1999 and 2000, Mosack, 69, lost $36 million gambling, primarily on sporting events, and won about $5 million. He allegedly placed bets of up to $1 million some days.

Mosack's attorney, David Rudolf of Chapel Hill, said Mosack retired in August and has been trying to cure his gambling habit. He said Mosack has pledged to repay the company for losses he may have caused.

"Carl has gone through a very difficult time as a result of his gambling addiction," Rudolf said. "It is a battle he has been fighting very hard over the last few months."

Mosack was scheduled to appear Thursday in U.S. District Court in Charlotte to enter the plea.

Conbraco, founded by Mosack's father, employs about 1,600 people and sells more than $100 million worth of industrial vales and gauges annually.

Last year, Mosack's gambling apparently brought the 73-year-old company close to ruin. First Union threatened to declare the company in default on its $8 million line of credit when it learned of his use of company loans to finance gambling debts.

Prosecutors say he began betting heavily in the summer of 1999 through bookies in Florida and the Caribbean.

In an indictment filed Wednesday with the plea agreement, the U.S. Attorney's Office said Mosack "took steps to conceal and disguise that the source of his gambling debt payments was shareholder loans drawn against First Union's sweep account and the Bank of America line of credit."

The indictment said Mosack, who was allowed to take out personal loans from the company, owed the company $13.77 million by December 1999.

Mosack sold $8 million worth of his Conbraco stock to reduce his company debts to about $300,000, according to the indictment. But by May 31, 2000, his Conbraco loans had soared to $21.27 million.

The indictment said the company's board of directors discovered Mosack's heavy borrowing in April 2000 during an annual audit of the company's books, forcing him to seek financing from area banks.

After he secured a $10 million loan from National Bank of South Carolina in May, the indictment alleges he used $5 million of the loan either to gamble more or pay off his gambling debts.

In June, Mosack received a $3 million loan from BB&T. Mosack also asked First Union for a loan in June, but the bank refused.

The case is Mosack's third run-in with federal officials.

In 1997, he paid $2.8 million in a civil settlement for what federal prosecutors believe were financial transactions involving gambling proceeds.

In 1993, Mosack pleaded guilty to tax evasion and was fined $20,000 and sentenced to six months' home detention.