Leonard Peth, allegedly a mastermind of a nationwide scheme to pay off mortgages with bogus money orders, has been indicted on mail fraud charges.

Federal marshals had arrested Mr. Peth in Tigerton, Wis., where he lives, for failing on Feb. 13 to answer a witness subpoena at a trial in Lafayette, La.

Last Thursday he was indicted, along with two associates, in a federal court in Wisconsin on six counts of mail fraud.

A federal judge in Lafayette has ruled that Mr. Peth should stand trial in Milwaukee on these charges. It is expected that he will be taken by the marshals to Milwaukee in 10 to 14 days.

Mr. Peth also faces a contempt charge in the subpoena matter. If convicted on that charge, he could be sentenced to six months in jail and fined $1,000.

Family Farm Preservation, an organization with which the three men are said to be associated, obviously constitutes "a protest group that is trying to gum up the banking system," said Gerald Bertinot, assistant U.S. attorney for the western district of Louisiana.

"Well, they are tugging on Superman's cape," Mr. Bertinot commented.

For about two years, thousands of lenders have been peppered with counterfeit money orders, some of which were alleged to have been distributed by Mr. Peth and Family Farm Preservation.

The money order kits often cost about $500 for a packet of six and extensive background information. The kits instruct buyers to use the money orders to pay off mortgages and other substantial debts.

Law enforcement officials say banks have so far fielded fake money orders with face values totaling more than $100 million. More than $65 million of counterfeit money orders have originated from Wisconsin alone, said a U.S. postal inspector.

Many such money orders instruct banks to contact L.A Pethahia for cash reimbursement. Law enforcement officials believe that L.A. Pethahia is Leonard Peth.

Only three people so far have been convicted of using the fake money orders.

"It takes a while for these things to start hitting," said Mr. Bertinot, the U.S. attorney, regarding the time it takes to get convictions.

Mr. Peth's Tigerton office was raided by federal agents in January 1993.

Most recently, Mr. Peth and Thomas Stockheimer, the other alleged mastermind of the scheme, were working out of a small storefront in Tigerton, a tiny town in northeast Wisconsin. Mr. Stockheimer and a third member of Family Farm Preservation were also indicted last week.

A recent call to the Family Farm Preservation office in Tigerton was answered by a man who declined to identify himself. He said he was unsure of Mr. Peth's situation.

"There is all kinds of bogus information out there," he said.

Asked whether Family Farm was still turning out fake money orders, he said that those who work there "have been reviewing everything for six months."

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