News

October 15, 2009

Gym owner charged

WILKES-BARRE – The owner of a Kingston gym raided one year ago has been formally charged with federal mail fraud.

Frank R. Peperno, owner of the former Maximum Health and Fitness, was charged Wednesday with carrying on an intricate money laundering scheme between January 2003 and June 2007.

An initial hearing was held before U.S. District Judge Malachy Mannion at the federal courthouse in Wilkes-Barre.

Peperno, a former Old Forge businessman, was released without bail.

The Internal Revenue Service and Secret Service started a joint investigation into the alleged money laundering of Peperno in 2005.

Federal agents seized gym equipment from Peperno’s health club on Oct. 23, 2008. Authorities alleged cash used to purchase the equipment was acquired through money laundering.

Sixty-two pieces of gym equipment were seized during that raid.

Peperno, a licensed equity and debt securities broker, was a branch manager in Lackawanna County for Linscoe/Private Ledger Financial Services from 2003 through 2007.

During that time, two people trusted Peperno to invest more than $347,500 with his financial company. Instead, Peperno put the funds into a business account he opened at Old Forge Bank.

The Kingston fitness center, formerly Gold’s Gym, was purchased in 2005 using $75,000 from the bank.

An investigation into Peperno revealed he forged client signatures at least nine times on account application documents forwarding by U.S. mail to his parent company, LPL Financial Services, according to a criminal complaint filed in federal court.

The scheme garnered him at least $54,088, court records indicate.

Peperno is also accused of conspiring with his cousin and then-business associate, James J. Peperno Jr., who was indicted in April 2006 on charges he bilked more than $200,000 from two individuals who gave him money to invest through his company, JLP Consulting, of Old Forge.

James Peperno began his sentence in March after pleading guilty earlier this year to one count of federal mail fraud.

A preliminary examination was set for Nov. 13 before Mannion.

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