The founder of a local discount plan that enables customers to receive reduced prices on goods by presenting a plastic "passport" cad to merchants, was indicted yesterday by federal grand jury on securities and mail fraud charges in connection with the plan.
George A. Milano, of Scottsdale, Ariz., was indicted by the grand jury sitting in Alexandria on two counts of securities fraud and five counts of mail fraud for allegedly failing to tell corporation investors of the company's poor financial posture.
The trade "passport" plan was offered in nine areas including Maryland, Virginia and the District of Columbia during the late 1960s and early 1970s. To finance the plan Milano sold stock to investors without telling them the plan was risky, the indictment states.
Milano also told investors in September 1969 that the Washington metropolitan area plan was near perfection and an established operation, and that the first two phases of the plan were nearly complete and the final phase would begin soon, the indictment states.
Milano knew, according to the indictment, that investing in the plan was risky, that as of September 1969 the Washington "passport" affiliate had no money, that the plan had been untested and that as of February 1970 the Washington affiliate was inactive. The D.C. plan had no capital but had many dissatisfied shareholders, the indictment said. The Washington-area "passport" plan company was insolvent as of May 31, 1970, the indictment states, after about 140,000 had been invested in it.