A suburban Toledo firm called Royal Links USA collapsed in 2005, leaving more than a thousand small golf courses nationwide claiming they were bilked in a scheme involving beverage carts.
Five years later, federal prosecutors are preparing to announce criminal charges in the case of the Springfield Township company.
A lawyer for Robin Flaum, former president of Royal Links, said yesterday that she expects to be charged in a federal bill of information as early as today.
Such a charge usually indicates that a defendant has reached a plea agreement with prosecutors.
And Ms. Flaum's Cleveland lawyer, Richard Lillie, confirmed that his client is cooperating with authorities investigating the case. He declined to specify what she will be charged with but said charges could be announced against others involved in the matter.
Royal Links was owned by Philip Cargnino of Sylvania and Daniel Sandwisch of Maumee, according to a 2005 petition filed in U.S. Bankruptcy Court in Toledo that listed $58,000 in assets and $8 million in debts.
After Royal Links closed, the two men went on to become major players in the commercial real estate market locally until property bets they made at Timberstone Group Inc., also of Springfield Township, went bad.
Mr. Sandwisch filed a personal bankruptcy last year listing $60 million in debts.
Mr. Cargnino is the former president of Armstrong Mechanical Services in Millbury, which was among the largest providers of heating and air conditioning services to companies and businesses in the Toledo area before it folded in 2008.
Neither man could be reached for comment.
Bill Edwards, a spokesman for the U.S. Attorney's Office in Cleveland, where the case is being handled, declined to comment.
"If nothing has been filed we can never confirm that we are ready to file anything," said Mr. Edwards. "We don't deny or confirm the existence of any investigation."
Mike Hughes, chief executive of the National Golf Course Owners Association, said he was not surprised that criminal charges could be imminent in the case.
The 1,300 golf courses involved in the case typically lost about $4,000 to $5,000 each.
Although the amounts may seem small, "everything hurts when you're a small operator," Mr. Hughes said.
He said golf course owners lost interest after the bankruptcy filing, which showed that the suburban Toledo firm had no assets with which to repay its debts.
By then, the FBI had begun looking into allegations, Mr. Hughes said. Federal court records, which remain under seal, show that investigators obtained a search warrant in the case in 2005.
It is unclear why authorities waited five years to file charges.
Royal Links had revenues of $12 million in fiscal 2004, according to bankruptcy documents.
The firm induced golf courses to sign multiyear contracts at high prices for beverage carts in exchange for a promise that the Springfield Township firm would reimburse them for the costs through revenues made on advertisements carried on the carts.
Golf courses inundated the Better Business Bureau of Northwest Ohio and Southeast Michigan with complaints after Royal Links suspended reimbursement payments in 2004 but the bureau advised golf course owners that they were still responsible for paying cart leases.
Contact Gary Pakulski at:
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