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Two former Amherst insurance agents were arraigned this morning in State Supreme Court on indictments charging them with bilking 45 Western New Yorkers out of $5 million in what authorities said is one of the biggest local investment frauds ever.

Dennis McNerney, 53, of 65 Old Orchard Lane, Amherst, pleaded innocent to 28 felony counts of larceny, forgery and fraud, along with three misdemeanor charges in the scheme, which allegedly ran from 1993 to 1998.

Michael R. Ferguson, 42, of 44 Wellington Drive, East Amherst, pleaded innocent to one felony fraud count and four misdemeanor charges. Authorities said he persuaded investors to put money into highly risky ventures that victims had been told were safe and would pay above-market interest rates.

Attorney General Eliot Spitzer said Metropolitan Life Insurance Co., which employed the agents or part of the time they were involved in the alleged scheme, will reimburse victims for $1.25 million.

The restitution will cover 90 percent of the money 28 of the investors put into World Wide Capital Funding while the two worked for Metropolitan. McNerney left Met Life in 1995 and allegedly continued to recruit investors. Those investors are not covered by the restitution fund.

"These two men calculatingly preyed on unsophisticated investors, many of them elderly, and have turned what should be the victims' golden years into absolute nightmares," Spitzer said.

"We want this case to serve as a warning to investors. If a deal sounds too good to be true, it probably is."

State law enforcement officials allege that World Wide Capital, a business formed by McNerney while he was working for Met Life, was involved in a highly risky business of buying the accounts receivable owed to businesses and trying to collect those debts.

World Wide Capital would buy the rights to collect the debts for a fraction of their total value and promise investors returns of 9 percent to 12 percent, while McNerney had the potential of earning profits of as much as 50 percent to 60 percent, said Dennis Rosen, an assistant state attorney general.

But World Wide Capital could not pay its dividends if it did not collect on those debts. Rosen said the company operated like a Ponzi scheme, where the money from new investors was used to pay interest owed to existing investors.

Ferguson, who worked at Met Life from October 1998 until June 1999, allegedly recruited investors for World Wide Capital.

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