Articles Posted in White Collar Crime Highlights

On June 19, 2009, Christopher P. West, a U.S. Army Major, and Patrick W. Boyd, a U.S. Air Force Master Sergeant pled guilty to various bribery, fraud, and conspiracy charges related to Department of Defense contracts in Afghanistan.

Charles Patton, a U.S. Army Sergeant pled guilty for receiving stolen property connected to the bribery conspiracy. Assad John Ramin and Tahir Ramin, both U.S. citizens, and their companies AZ Corporation and Top’s Construction, Noor Alam, an Afghan citizen, and his company Northern Reconstruction Organization, and Abdul Qudoos Bakhshi, an Afghan citizen, and his company Naweed Bakhshi Company were all indicted for bribing military officials and defrauding the U.S. Department of Defense (“DOD”).

Mr. West and Mr. Boyd pled guilty to three counts of bribery and three counts of conspiracy. He accepted $90,000 cash from contractors for the steering contracts to those contractors at Bagram Airfield, Afghanistan. Mr. West also received payments for inflating the number of bunkers and barriers at Bagram Airfield. As such the DOD paid for goods that were invoiced but which were never received. Mr. Boyd also received an additional cash payment of $25,000 for steering a contract for telecommunication infrastructure at Bagram Airfield to a contractor. Mr. Patton, who was not deployed in Afghanistan, received the cash payments from Mr. West. Mr. Patton hid the money in his home in Chicago at the request of Mr. West, before he transferred $100,000 into a safe deposit box in his own name.

On June 16, 2009, Harvey N. Nusbaum and Jeff W. Stollof, two Baltimore, MD businessmen, were indicted for conspiring to rig bids in tax lien auctions in Maryland.

If a property owner in Maryland fails to pay his/her property taxes, the State government imposes a lien. If the taxes are still unpaid, the tax liens are sold at auction. The winner of the auction then gets the right to collect the taxes plus interest owed on the property along with foreclosure rights if taxes are still unpaid. Mr. Nusbaum and Mr. Stollof conspired with co-conspirators to rig these bids in Baltimore between 2002-2007. Both businessmen and their co-conspirators agreed to which specific tax liens they would bid for and agreed on specific bid amounts in certain auctions.

On June 3, 2008, Steven L. Berman, a Maryland tax lien agent, pled guilty and agreed to pay $750,000 for his role in rigging bids in tax lien auctions in several Maryland counties. He is awaiting sentencing.

On June 11, 2009, Anthony M. Tesvich, a former Home Depot employee, was sentenced to serve six years in federal prison for charges of conspiracy to commit wire fraud and filing false tax returns.

According to the Department of Justice (“DOJ”), the conspiracy took place from October 2002 to October 2007. Mr. Tesvich took kickbacks from various foreign vendors seeking to do business with Home Depot. Mr. Tesvich also provided kickbacks, which he referred to as “milk shakes” and “French fries”, to other employees of Home Depot during and after his employment at Home Depot. Furthermore, the DOJ charged Mr. Tesvich with evading taxes for his income between the years 2003-2005 amounting to approximately $1.3 million.

Andre Barlow

On May 27, 2009, Diana Bakir Demilta, president of Global-Link Distribution, LLC, a defense contracting company, pled guilty to one count of wire fraud and admitted to bribery in connection with contracts for operations in the International Zone, Baghdad, Iraq.

Between September 2004 and March 2005, Ms. Demilta submitted multiple sham bids for a contract for bulletproof vests. The sham bids were intentionally submitted with increased prices so that a Kuwaiti trading company would receive the bid. The owner of the Kuwaiti company authorized Ms. Demilta to negotiate and received all funds related to the contract. She also admitted to paying $60,000 to an unnamed public official in return for that person’s influence in steering the contracts and expediting payments to Ms. Demilta’s company.

Andre Barlow

On May 19, 2009, Ronald Douglas Matheny II, the former product merchant in Home Depot’s flooring department, pled guilty to his role in a conspiracy to commit wire and mail fraud and a conspiracy to commit money laundering connected to a scheme to defraud his former employer, Home Depot.

Mr. Matheny was employed with Home Depot from May 1987 to July 2007. He was responsible for locating outside firms to facilitate the displays of flooring merchandise in all of Home Depot’s retail stores. He and un-named co-conspirators sold items for re-sale to Home Depot and supplied services to Home Depot on less than advantageous terms. For this Mr. Matheny received approximately $1.5 million in kickbacks from his co-conspirators.

Earlier this month, Melissa Deaton Tesvich, ex-wife of former Home Depot employee, Anthony Tesvich, who pled guilty for one count of wire fraud, herself pled guilty to one count of filing a false tax return.

On May 14, 2009, Melissa Deaton Tesvich, ex-wife of former Home Depot employee, Anthony Tesvich, who pled guilty for one count of wire fraud, herself pled guilty to one count of filing a false tax return.

According to the Department of Justice, Ms. Tesvich filed a joint federal tax return for 2005 where she underreported her taxable income by $1.07 million and underreported taxes owed to the U.S. government by approximately $385,000. Ms. Tesvich was also served as a bookkeeper and assisted her husband in his side businesses.

On January 15, 2009, Ronald K. Johnston, a former employee of Home Depot, pled guilty to conspiring to commit wire fraud and for two counts of filing false tax returns in an attempt to defraud Home Depot. The conspiracy took place between 2005 and 2007. Specifically, Mr. Johnston received kickbacks from foreign suppliers seeking to do business with Home Depot. In return, Mr. Johnston purchased supplies on behalf of Home Depot on less than the most advantageous terms for Home Depot. Anthony Tesvich, the former husband of Ms. Tesvich, passed on kickbacks to Mr. Johnston worth thousands of dollars and paid for home improvement expenses for Mr. Johnston’s residence. As a part of the same investigation, on July 11, 2008, James P. Robinson, a former Divisional Merchandising Manager for Flooring at Home Depot, pled guilty to one count of conspiracy to commit wire fraud and two counts of tax evasion related to a scheme to defraud Home Depot. On April 2, 2009, Mr. Johnston and Mr. Robinson were sentenced to serve five years and three months, which would be followed by three years of supervised release. The court ordered both to pay $1.7 million in restitution. Mr. Johnston pled guilty to the charges in January 2009 and Mr. Robinson pled guilty to the charges in July 2008.

On May 1, 2009, Thomas J. DeGirolamo, owner and president of a designing and manufacturing firm, pled guilty for his role in a conspiracy to allocate a U.S. Navy contract for navy straps.

Navy straps are a type of equipment used by the U.S. Navy to tiedown munitions and other equipment for transport on ships and airplanes.

The conspiracy took place between March 2004 and November 2007. This is the 11th indictment to arise from an ongoing investigation into the military restraint industry. Military restraint equipment is used to tie down and secure vehicles, aircraft, munitions, shipping containers, and other specialized military cargo requirements for transportation.

On April 27, 2009, Bock Kwon, a high level executive at LG Display Co. Ltd. (“LG”) pled guilty, agreed to serve one year in prison in the United States and pay a criminal fine of $30,000 for his role in a conspiracy to suppress and eliminate competition in the Thin Film Transistor-Liquid Crystal Display (TFT-LCD) industry by fixing prices of TFT-LCD panels.
TFT-LCD panels are used in computer monitors, notebooks, televisions, mobile phones, and other electronic devices. Worldwide sales in 2006 were $70 billion.

In March 2009, Hitachi Displays, Ltd. pled guilty and agreed to pay a fine of $31 million for its role in the same conspiracy. In January 2009, three former executives of three different electronics manufacturers pled guilty for their roles in a global price fixing conspiracy in the sale of TFT-LCD panels. According to the Department of Justice, these were the first individuals charged in the investigation into the TFT-LCD industry. On November 12, 2008, LG Display Co. Ltd. (“LG”), Sharp Corp. (“Sharp”), and Chunghwa Picture Tubes Ltd. (“Chunghwa”) pled guilty for their role in a conspiracy to fix prices for liquid crystal display (“LCD”) panels and agreed to pay criminal fines totaling $585 million.

On April 21, 2009, Douglas E. Ritter, president of a refuse disposal container repair company, and Stephen Fenzl, vice-president of the same company, were charged with conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud.
According the indictment, Mr. Ritter and Mr. Fenzl conspired to defraud the city of Chicago by misrepresenting the number of legitimate, competitive bids submitted to the city as well as determining the prices of those bids and submitting fraudulent documents with them. Mr. Ritter and Mr. Fenzl also provided the city with fraudulent documents regarding the use of subcontractors from the city’s Women and Minority Business Enterprise program. They fraudulently collected on payments made by the city to these subcontractors.

This is the first case to be brought in the Department of Justice’s ongoing antitrust investigation into the refuse cart repair industry.