Steven Hoffenberg, the former chairman of Towers Financial Corp., could serve a maximum of 25 years in prison and pay "appropriate fines" if federal prosecutors agree to reinstate an earlier plea agreement.
Mr. Hoffenberg's attorney, Jeffrey C. Hoffman, filed a motion late last month seeking to enforce the plea agreement reached last September. The request will be heard this week by U.S. District Judge Robert W. Sweet in New York.
Early last year, it was revealed that Mr. Hoffenberg and his receivables financing company were under federal scrutiny. In February 1993, the Securities and Exchange Commission brought a civil complaint against Mr. Hoffenberg and others associated with Towers for allegedly selling $215 million in unregistered securities, among other violations.
About the same time, federal prosecutors were conducting a criminal investigation of Mr. Hoffenberg and associates for conspiracy to obstruct the SEC probe and other alleged violations of securities law.
According to court documents, the plea agreement was negotiated last September but later dropped. Prosecutors maintained that Mr. Hoffenberg failed to comply with the terms of the agreement.
Mr. Hoffman contends that the government "unfairly and improperly terminated the agreement" and is seeking to have it reinstated.
Mr. Hoffenberg was arrested Feb. 17 for alleged violations of securities laws, conspiracy and obstruction of justice, and he was indicted in April in federal court in New York. He also was indicted in federal court in Chicago on charges that he skimmed $3 million in funds from two defunct insurance companies.
If the plea bargain is reinstated, Mr. Hoffenberg would plead guilty to a five-count indictment: conspiracy to fraudulently sell securities, conspiracy to obstruct justice, tax evasion and two counts of mail fraud. As part of the deal, he wouldn't be prosecuted for alleged securities fraud, obstruction of the SEC's investigation, income tax evasion or insurance fraud.