By James McNair
The Cincinnati Enquirer

Already anxious that their combined $13.5 million might be lost forever, customers of former investment promoter George Fiorini will have to reach into their wallets again - this time to help pay for Mr. Fiorini's legal defense as taxpayers.

In a one-page affidavit obtained by the Enquirer, the Miami Township resident says he is too poor to afford a lawyer to face criminal fraud charges that a federal grand jury is considering against him. He says he has no job, no cash and not enough assets to offset his debts.

Based on that sworn statement - and a referral by the U.S. Attorney's Office - U.S. Magistrate Judge Jack Sherman Jr. appointed the federal public defender's office to represent Mr. Fiorini. The case was assigned to assistant public defender W. Kelly Johnson.

The FBI and IRS have been investigating Mr. Fiorini since 1997 for raising an estimated $13.5 million from the sale of unregistered promissory notes to about 200 Greater Cincinnati residents. The investors had responded to broadcast and print ads for a program that promised annual returns of 10 percent or more. What they received were IOUs from a company that sought to buy and roll out a new system of medical waste disposal.

Ohio securities regulators, while shutting down Mr. Fiorini's operation in September 2001, chose to let the investors pursue their losses through private lawsuits that are wending through local courthouses. Meanwhile, the Hamilton County Prosecutor's Office took no action, leaving federal agencies as the investors' best hope to recover their money.

This summer, the government identified Mr. Fiorini as a "target of a grand jury investigation," Mr. Johnson said. The grand jury examined boxes of his books and records, and the government provided him with the form to seek court appointment of a lawyer to defend him in the event that he is charged with investment fraud.

"Many times in federal investigations, especially in white-collar investigations, a lawyer is appointed in order for the person to work out some sort of plea agreement prior to a charge officially occurring," Mr. Johnson said Monday. "It entitles him (Mr. Fiorini) to counsel and the opportunity to have contact and negotiations with the United States in a more protected and formalized fashion."

Susan McCarthy of Burlington, who with her husband, Ed, invested $52,000 with Mr. Fiorini, was outraged.

"How about some free counsel for the investors he duped?" asked Mrs. McCarthy. "Many cannot afford the upfront money required to file a class-action claim against" him.

In his financial affidavit, Mr. Fiorini values his 13-acre homestead on Wesselman Road at $400,000, but indicates that only $40,000 is equity. He states receiving $2,700 in rent payments and $400 in insurance renewals, but lists a monthly payment of $1,500 for his leased 2000 Mercedes and debts of $75,000 to his father-in-law, $35,000 to credit cards and $12,000 in back property taxes. Citibank has commenced foreclosure proceedings against Mr. Fiorini's five-bedroom house.

The form says his four other Cincinnati properties; three Siesta Key, Fla., condos; and a Gatlinburg, Tenn., condo have been seized through IRS asset-forfeiture lawsuits filed in October 2001. In an auction Dec. 16-18, the government is selling eight cars and a boat seized from Mr. Fiorini in a separate forfeiture case.

Fred Alverson, a spokesman for the U.S. Attorney's Office, said prosecutors took no position on the appointment of a public defender for Mr. Fiorini. They can, however, challenge his indigent status later, he said.

"In general, if at any point during a criminal investigation evidence comes up that somebody had lied on an affidavit, there are mechanisms we can use to challenge it and, when appropriate, file charges," Mr. Alverson said.

E-mail jmcnair@enquirer.com