John Spano, disgraced former Islanders' owner, indicted on theft, forgery charges

John Spano, whose infamous bid to buy the Islanders in 1997 landed him in prison for bank fraud, has been indicted by a grand jury in Ohio on one count of theft and 44 counts of forgery.

Spano, 50, of Madison, Ohio, was arrested Aug. 21 and pleaded not guilty to accusations that he forged dozens of contracts and pocketed the commissions over a two-year period while working as a medical supplies salesman for an Ohio-based company.

He posted $50,000 bond and was released the same day. The case is assigned to Lake County Common Pleas Judge Joseph Gibson, who has not yet set the next court date. Spano did not respond to messages left at his house or on his cellphone.

"We are aware that he has two prior federal convictions that resulted in federal prison terms that had charges of a deceptive nature,” said Alexandra Kutz, a Lake County, Ohio, assistant prosecuting attorney who is working on the Spano case.

Prosecutors allege in court papers obtained by Newsday that Spano stole a total of between $7,500 and $150,000 from his employers Image First, which rents linens to outpatient facilities in Ohio, and its sister company London Cleaners.

The scheme took place from June 2011 until July 2013, according to the documents.

Jay Milano, Spano's attorney, said in a telephone interview that Spano played only "a minor role” in the scheme. Milano said the idea was hatched by London Cleaners' owner, Alex Shvartshteyn, as a way to generate the illusion of revenue to show his corporate office.

"The boss orchestrated it and when the boss got caught, Spano was an easy target to blame,” Milano said.

"If you say he did it, people's first reaction will be to believe it." Shvartshteyn, the London Cleaners' owner for 30 years, denied any role in the scheme. "This could not be further from the truth,” he said.

Spano's attempt to buy the Islanders remains one of the most bizarre scams in sports history. Spano had agreed to buy the team from John Pickett for $165 million in 1996.

In February 1997, Spano took control of the team after the NHL's board of governors unanimously approved the transfer of ownership. In July 1997, Newsday obtained documents that revealed a trail of bounced checks and broken promises, which triggered a U.S. Justice Department probe in Spano's business dealings. In January of 1998, Spano admitted he lied to get an $80 million loan to finance the purchase of the Islanders.

Spano was sentenced to 71 months in prison for bank fraud. After being released, Spano was sentenced to 51 months in prison in 2006 in a different fraud case.

Shvartshteyn said he did not do a background search when he hired Spano as a driver. He later promoted Spano to salesman. He said he was not aware of Spano's notorious bid to buy the Islanders until he heard ESPN was working on a documentary, which aired early last year

JOHN SPANO'S LEGAL TROUBLES

Nov. 26, 1996: John O. Pickett agrees to sell the Islanders to John Spano for $165 million.

April 7, 1997: Sale is closed as Pickett receives $15 million (from a Fleet Bank loan) and a promise that an additional $17 million is forthcoming.

June 30, 1997: NHL bars Spano from running the day-to-day operations of the team.

July 8, 1997: Justice Department begins probe into Spano's business dealings.

July 10, 1997: Spano gives up his claim to the Islanders.

July 23, 1997: Spano is indicted in U.S. District Court in Uniondale on wire and bank fraud charges in the Islanders deal.

Aug. 13, 1997: Spano is indicted by a federal grand jury in Fort Worth, Texas, on charges of bank fraud not connected to the Islanders deal.

Oct. 7, 1997: Spano pleads guilty in federal court to four counts of fraud lodged by Long Island and Texas prosecutors.

Jan. 28, 2000: Spano sentenced to 5 years, 11 months in prison for the four counts of fraud he had pleaded guilty to in 1997. He is also given five years of probation and ordered to undergo psychiatric and drug counseling and pay $11.9 million in restitution.

June 2004: Spano released from prison.

Feb. 17, 2005: Spano arraigned on new fraud charges in federal court in Cleveland.

Jan. 27, 2006: Spano sentenced to 51 months in federal prison.

July 23, 2006: Spano is sentenced in U.S. District Court in Central Islip to an additional six months in prison for violating conditions of his release in the Islanders case over the fraud conviction in Cleveland.

April 3, 2009: Spano released from prison.

Yesterday: Spano is indicted by a grand jury in Ohio.