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July 6, 2001

PHILADELPHIA - Former U.S. Rep. Edward Mezvinsky, D-Iowa, will plead not guilty by reason of insanity to charges that he defrauded banks and individuals of $10.4 million, his lawyer said Thursday.

"We have filed a notice of intent detailing our plea of insanity because our client, Edward Mezvinsky, was crazy with a serious mental illness for many years," attorney Mark E. Cedrone told United Press International. The lawyer said an anti-malarial drug, Lariam, made his client's condition worse.

In a 129-page indictment in March, federal prosecutors charged Mezvinsky, who has ties to the Clintons, with 66 counts of fraud and related offenses. They allege he committed fraud "by misusing attorney escrow accounts held in his name, engaging in schemes involving worthless checks deposited at banks, creating forged bank statements, using false financial statements, tax returns and accountant's letters and giving false testimony under oath." The indictment followed a two-year investigation by the FBI, Internal Revenue Service, Postal Service and other federal agencies.

Prosecutors said the fraudulent schemes, perpetrated by con artists posing as royalty in Africa, are commonly known as "Nigerian advance fee schemes" that involve promises of great wealth if the person first pays fees or other costs to the defrauders, who are posing as businessmen.

According to prosecutors, from 1989 to 1999, Mezvinsky as a private attorney and self-employed businessman engaged in a classic Ponzi scheme, in which those who entrusted him with money were repaid with money conned out of others, including using checks from his wife's congressional bank account, spending his wife's inheritance and bilking his 84-year-old mother-in-law out of about $300,000. His wife is a former Pennsylvania congresswoman.

"This ordinary insanity defense has been blown way out of proportion because of the mentioning of the drug Lariam," Cedrone said. "The drug did not make him crazy, he was crazy, and the drug made him worse - he didn't know he was crazy - and as person suffering from bipolar disorder he didn't see the downside to these bizarre financial investments."

Mezvinsky took Lariam before dozens of business trips to Africa in the 1990s. The Centers for Disease Control and Prevention advise travelers not to take the Lariam, also known as mefloquine, if they have "a history of severe mental illness or other psychiatric disorders." Cedrone said his client had not been treated for any mental illness for the years covered in the indictment. He refused to comment on whether Mezvinsky is currently seeking treatment.

The day after being indicted on the fraud charges, Mezvinsky and his wife, Marjorie Margolies-Mezvinsky, filed a lawsuit against Roche Holding AG, Presbyterian Medical Center in Philadelphia, a Montgomery County, Pa., pharmacy and Mezvinsky's physician, Dr. Bradley Fenton, charging that Mezvinsky suffered mental and physical disorders from the Lariam.

"As a result of the psychiatric syndrome caused by his long-term use of Lariam, he invested rashly in bad investments," the lawsuit said, the Philadelphia Daily News reported. "He depleted his own financial resources, his wife's financial resources, as well as his wife's inheritance."

His wife was not charged with any criminal wrongdoing. However, federal prosecutors said that she introduced her husband to some of those he victimized, and that Mezvinsky used his position and reputation in victimizing others.

At the time of his indictment, Margolies-Mezvinsky made a statement that she, their children and her family will continue to support him. "He succeeded in defrauding others and gaining their confidence in part by stressing his lengthy experience in national and international affairs and his acquaintance with prominent political figures," U.S. Attorney Michael Stiles said.

Since 1999, Mezvinsky and his wife have been the target of lawsuits alleging they owe $7.4 million to banks and individuals. Mezvinsky filed Chapter 11 bankruptcy in January 2000 to give him time to reorganize his finances. Margolies-Mezvinsky filed less than a month later for Chapter 7 bankruptcy.

Cedrone said his client refinanced his family's houses, but he couldn't comment on whether Margolies-Mezvinsky knew about her husband's business affairs.

"All I know about my client's wife is that her first name is Marjorie," Cedrone said.

Under U.S. sentencing guidelines, if convicted, Mezvinsky faces a prison sentence of 87 to 108 months.

According to Cedrone, the prosecution is attempting to exclude the insanity defense, and a hearing is scheduled for Oct. 15. The case is scheduled to go to trial in January 2002.

"My client lost several millions of his own money in the African schemes," Cedrone said. "My client is a crime victim."