BEHIND THE NEWS: Just before sentencing, failed exec judged incompetent

Angry investors in James T. O’Neal Jr.’s failed auto mall company have waited nearly a decade for the Carmel native to get his comeuppance. They thought that day would come this spring, at his sentencing on two felony charges stemming from what investigators say was a scheme to swindle the rich and famous in Indianapolis and central Florida out of millions of dollars.

But now a psychiatrist has concluded that “O’Neal is suffering from a mental disease rendering him unable to proceed to sentencing because he is not presently able to assist properly in his defense,” court papers filed in Orlando, Fla., where O’Neal resides, show.

Based on the psychiatrist’s April 11 report finding O’Neal “not mentally competent,” the U.S. Attorney’s Office has agreed to put off sentencing for four months, while O’Neal receives treatment at a Federal Bureau of Prisons medical center.

It’s the latest surprise in a case full of unlikely twists.

According to prosecutors, O’Neal in the early and mid-1990s enticed elite business executives to invest more than $18 million in Carmel-based American Public Automotive Group, a startup O’Neal said would open car dealerships adjacent to shopping malls nationwide.

Buying into the pitch were the Simon family, music promoter David Lucas, City Securities Corp. executive James Merten, furniture store owner Jim Kittle and more than a dozen other Indianapolis executives.

But the plan went nowhere. The company in 1998 ran out of money and slid into bankruptcy-without owning a single dealership. A federal grand jury in Orlando indicted O’Neal in 2004, alleging he diverted more than $7 million to fund a lavish lifestyle for himself and his family. One Christmas, for instance, he dashed off $90,000 in gift checks to his family.

O’Neal, now 60, averted trial in December by agreeing to plead guilty to two counts of filing false tax returns. He’d faced a total of 82 counts of filing false returns, money laundering and mail fraud. As a result of the plea, he could face up to six years in prison.

It’s not clear what the psychiatrist found in his examination, because he filed his report under seal, and other parties in the case would not discuss its contents.

However, Assistant U.S. Attorney Randy Gold told IBJ: “Based upon what I saw in the report, I agreed to stipulate he is incompetent to proceed to sentencing at this time.” He expressed optimism O’Neal would be ready for sentencing in four months.

One of the most outspoken investors, himself a psychiatrist, is skeptical of the turn of events.

“I’m not surprised. I thought he would play the mental health card a long time ago,” said Dr. Alan Cohen, CEO of the National Deaf Academy in Mount Dora, Fla.

While Cohen said he has not conducted a psychiatric exam of O’Neal, “certainly, I had a lot of interactions with him over several years. I never asked myself, ‘Is this guy crazy or out of control?’ at any time.”

This isn’t the first time O’Neal behaved erratically, however. He tried to commit suicide in 2000, according to police reports reviewed by the Orlando Sentinel. Deputy sheriffs found him in the wooded area of a park, his body partly covered by leaves and a black leather belt around his neck. When awakened, he said he was despondent over financial problems and had taken a dozen sleeping pills.

In a suicide note at the time, O’Neal apologized “for anyone I disappointed or hurt, all the way from grade school … until today.” The following year, in a newspaper interview, he declined to discuss the incident but acknowledged he’d been “in bad shape emotionally” and behaved in a “bizarre way.”

In a six-hour interview with IBJ in 2000, O’Neal acknowledged spending investors’ money on personal expenses. But he said he withdrew it as loans-with the full intention of paying it back.

His justification: He was certain the auto business would succeed and go public, creating a huge financial windfall.

“It’s no effort for anybody to reconstruct where I spent every dime they claim I took improperly. I insisted we keep meticulous records, and we did,” he said. “If I was going to steal it, wouldn’t I have destroyed the records?”

Brightpoint lavishes Laikin

These are heady times for wireless phone wholesaler Brightpoint Inc., and CEO Bob Laikin is enjoying the fruits of that success in the form of eyepopping pay.

The company’s newly filed proxy statement shows he received salary, bonus and restricted stock last year topping $6.2 million. His bonus was $1.3 million, six times what he collected a year earlier. His stock grant was valued at $4.2 million; he didn’t receive a grant a year earlier.

Shareholders are unlikely to mind-they’re making lots of money on the stock. Brightpoint shares appreciated 113 percent in 2005. So far this year, they’re up another 77 percent.