Nov. 26–A Mahwah-based executive who boasted of business ties to a porn star surrendered Tuesday to FBI agents after being charged in a wide-ranging fraud investigation.

Millennium Direct Inc.’s chief executive, George Balis, 56, was arraigned Tuesday in U.S. District Court in New York City on charges of conspiracy to commit securities fraud, mail fraud, and wire fraud.

Balis, who had been a fugitive for almost a week, pleaded not guilty and was released on $250,000 bail.

“Mr. Balis asserts his innocence and intends to defend himself at trial,” said his lawyer, Alan Kaufman.

Millennium Direct started life as a children’s video company, later adding a wrinkle cream business and, more recently, seeking profits by announcing an alliance with porn star Gina Lynn. Millennium’s stock, which sells over the counter, closed Tuesday at 2 cents, down 3 cents.

Authorities say Balis and his company’s legal adviser, David A. Appell, made false statements this year when they tried to raise $300,000 from an “investor” who was actually an undercover FBI agent investigating widespread foreign-currency fraud on Wall Street. The 18-month investigation led to 47 arrests.

Balis and Appell allegedly told the agent that they planned to use the borrowed money to finance an infomercial for “TheraCel,” an anti-wrinkle cream that features the Eiffel Tower as part of its logo. TheraCel is one of Millennium’s main products. The others are an anti-wrinkle pillow and children’s videos that teach about vehicles and construction equipment, with such titles as “Jane the Crane” and “Brett the Jet.” In September, Millennium also announced a business venture with Gina Lynn, star of “Gina Lynn Presents: Strippers Down and Dirty,” to market a line of videos, DVDs, and other products.

“We have been looking for new ways to expand and enhance Millennium’s potential revenues and believe Gina Lynn may have an impact,” Balis said in a news release at that time.

A director of the company, reached Tuesday, declined to comment; another director did not return a call seeking comment.

Attempts to reach Lynn were not successful.

Although Millennium Direct is not involved in currency trading, it became part of the FBI sting when Balis and Appell were introduced to the undercover agent by an unnamed person who was cooperating with the investigation, according to court documents. They were told that the agent was a businessman looking for investment opportunities.

They allegedly asked him for a $300,000 loan, to be repaid with 6.5 percent interest and a share of the TheraCel revenues. But they did not tell him that instead of investing all the money in the company, they planned to pay half of it as a finder’s fee to the person who introduced them, the prosecutors say.

Appell, 40, of Blauvelt, N.Y., was arrested last week, along with most of the 47 defendants in the foreign-currency case, called “Operation Wooden Nickel.” In addition to the charges related to Millennium, he was also charged with perjury in testimony to the Securities and Exchange Commission in another Wooden Nickel case, involving United Currency Group of New York. An executive of United Currency Group is accused of defrauding investors in a stock offering that raised almost $800,000.

Appell’s lawyer, Robert Wolf of New York, said his client is innocent and will fight the charges.

Balis lives upstate in North Blenheim, N.Y. Although Millennium Direct was incorporated in Delaware in 1994, some of its financial documents list its home as North Blenheim, while its Internet site lists its address as 270 Larch Lane, a town house in Mahwah.

According to property records, the town house is owned by Robert Whalen. Whalen’s phone number is unlisted, and no one answered the door Tuesday morning. His connection to Millennium Direct, if any, could not be determined Tuesday.

Operation Wooden Nickel began two years ago when a person involved in foreign currency scams began cooperating with the FBI. The FBI then sent in an undercover agent, who posed as a hedge fund manager and rented space at a financial services company called Madison Deane.

The FBI agent had “more criminal schemes thrown at him than you can imagine,” said U.S. Attorney James Comey.

Currency traders at major financial services companies allegedly took bribes to rig trades, even though that caused their employers to lose money. In other cases, boiler-room brokers allegedly scammed investors into pouring money into foreign currency investments, and then pocketed the money.

–By Allison Pries and Kathleen Lynn. Staff Writer Brian Aberback contributed to this article.

—–

To see more of The Record, or to subscribe to the newspaper, go to http://www.NorthJersey.com.

(c) 2003, The Record, Hackensack, N.J. Distributed by Knight Ridder/Tribune Business News.