Two Harford men admit defrauding investors Money for stock went to luxuries


Two Harford County men have pleaded guilty to unlawfully spending $370,000 of investors' money on personal expenses and luxuries, such as several Cadillacs and a deposit on a waterfront property.

Joseph J. Owsik, 57, of Joppa, and Leo D. Coughlin Jr., 60, of Edgewood, pleaded guilty Wednesday in Harford County Circuit Court. The two men had faced charges of fraudulently misappropriating funds by a fiduciary.

Prosecutors said Owsik and Coughlin -- who at the time were president and vice president of the now-defunct Valco International Inc. -- collected money from investors to develop and market a device to prevent drunken drivers from starting a car.

According to the statement of facts presented at the trial, Drunkguard, as the device was called, was never manufactured by Valco.

Owsik is on a disability pension. Coughlin is a copy editor for The Aegis, a Harford County weekly newspaper owned by The Baltimore Sun. He worked at The Sun as foreign news editor for nine years in the 1970s and as editor of the Sunday Perspective section for four years before resigning in 1983.

Sentencing is set for Jan. 6. The two men could receive five-year prison terms but, in a plea arrangement, prosecutor Norman L. Smith said he would recommend that Judge Stephen M. Waldron suspend all but 18 months and make restitution a condition of probation.

Owsik spent more than $100,000 on cars for personal use and used Valco funds to pay for his son's Little League baseball team to travel to Florida. Coughlin, evidence showed, spent more than $4,000 in 1988 to finance Unity, an Alcoholics Anonymous newsletter which he edited. He also presented cash birthday gifts to his daughters with Valco funds.

"In our audit, we gave them credit for any money paid out, if it seemed to be a legitimate business expense," said Mr. Smith, who would not speculate on either man's ability to pay restitution, or whether investors can ever expect to recoup their money.

Attorney General J. Joseph Curran Jr. filed the lawsuit against Joppatowne-based Valco two years ago.

Reached yesterday at home, Coughlin declined to comment on the case. Attempts to reach Owsik or his attorney, Robert Holt, were unsuccessful.

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