Business Crimes Hotline

Hydroform is charged with two counts of conspiracy and 10 counts of making false statements. Temperform is charged with two counts of conspiracy and 32 counts of making false statements. Curiel is charged with one count of conspiracy and seven counts of making false statements. Camacho is charged with one count of conspiracy and 16 counts of making false statements. Sauceda is charged with one count of conspiracy and four counts of false statements. The charges of making a false statement and conspiracy each carry a maximum sentence of 5 years' imprisonment and a $250,000 fine for each count for the individuals, and 5 years' probation and a $500,000 fine for the companies.

U.S. Attorney and SEC Bring Fraud Charges Against Former Officers of U.S. Wireless, Inc.

Separate criminal and civil charges were brought against Oliver Hilsenrath and David Klarman, the former Chief Executive Officer and former General Counsel, respectively, of U.S. Wireless, Inc. According to the criminal indictment, Hilsenrath and Klarman allegedly participated in a fraudulent scheme to cause U.S. Wireless to issue stock options and shares to shell corporations located in the British Virgin Islands and under their ownership and control. Hilsenrath and Klarman allegedly caused U.S. Wireless to make monthly, multi-thousand dollar payments via wire transfer to their offshore shell corporations as payments for bogus consulting agreements. The indictment also alleges that Hilsenrath and Klarman concealed their misappropriation of the company's stock and money by causing U.S. Wireless to make materially false and misleading statements in its 1998, 1999, and 2000 annual reports to the SEC.

After the fraud was discovered, U.S. Wireless restated its financial results by increasing its fiscal year 2000 loss by more than 55%. NASDAQ discontinued trading the stock after the company publicly disclosed the fraud.

Both Hilsenrath and Klarman were indicted on three counts of securities fraud, in violation of 15 U.S.C. ' 78ff, which carries a maximum penalty of 10 years' imprisonment and a $1 million fine. In addition, Hilsenrath was indicted on 33 counts of wire fraud, and Klarman was indicted on 16 counts of wire fraud, in violation of 18 U.S.C. '' 1343 and 1346. Each wire fraud violation carries a maximum penalty of 5 years in prison and a $250,000 fine.

MICHIGAN

Michigan Executive Charged in Kickback Scheme

Larry E. Bennett, the President of Premiere Video, Inc., was charged with wire fraud in connection with an alleged kickback scheme used to defraud an unnamed Troy, MI, audio-visual company. Bennett allegedly paid money via wire transfer to an executive of the Troy audio-visual company in exchange for that executive's continued support in the contract negotiations between the Troy company and Premier Video for duplicating and distributing videotapes.

The wire fraud charge, in violation of 18 U.S.C. '' 1343 and 1346, carries a maximum penalty of 5 years in prison, 3 years of supervised release, and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.

NEW YORK

Former New York Advertising Executive Pleads Guilty to Conspiracy Charge

Barry Holland, a former vice president of the Manhattan advertising company Transportation Displays Inc., pleaded guilty to a fraud charge relating to his alleged involvement in a conspiracy in which he allegedly received approximately $176,000 in kickbacks from The Color Wheel Inc., a printing vendor. According to the one-count charge, Holland received kickbacks from The Color Wheel in exchange for steering contracts to that company from approximately 1991 through 2000.

The conspiracy charge, in violation of 18 U.S.C. ' 371, carries a maximum penalty of 5 years in prison, 3 years of supervised release, and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine. In addition, if convicted, the defendant could be ordered to pay restitution to any victim for the full amount of that victim's loss.

This is the latest charge to arise from the ongoing federal antitrust investigation of bid rigging, bribery, fraud, and tax-related offenses in the advertising and printing/graphics industries. On March 25, 2003, Haluk K. Ergulec, the former owner of The Color Wheel, was sentenced to 37 months in prison and ordered to pay $1.5 million in restitution.

TEXAS

Five Former 'Smart-Mart' Officers Indicted

Timothy A. McMurray, Bradley D. Woy, Edward M. Stanton, Kenny J. Davis, and Susan McMurray were each indicted for one count of securities fraud, in violation of 15 U.S.C. '' 77q(a) and 77x; six counts of mail fraud, in violation of 18 U.S.C. ' 1341; nine counts of wire fraud, in violation of 18 U.S.C. '1343; and ten counts of interstate transportation of money taken by fraud, in violation of 18 U.S.C. '' 2314 and 2. Woy, Stanton, Davis, and Susan McMurray also were charged with an additional four counts of interstate transportation of money taken by fraud and an additional 24 counts of wire fraud.

Timothy McMurray was a founder and former President and CEO of Smart-Mart. Woy was the former Chief Operating Officer and CEO after McMurray's resignation. Stanton was a founder and former Senior Vice-President in charge of product procurement. Davis was a founder and former Vice-President in charge of marketing. Susan McMurray was the Vice-President in charge of women's services.

According to the indictment, from March 1998 through July 1999, the defendants engaged in a scheme to defraud people through the United States and Canada, who were induced to invest money in Smart-Mart and purchase its stock. In the course of offering and selling stock, the defendants allegedly made numerous false representations with the intent to defraud, including that Smart-Mart was a thriving company, positioned for substantial growth, financially sound, and had sufficient capital and resources to operate. According to the indictment, in reality, Smart-Mart's sales were minimal. It had few products to sell on its Web site, and no real ongoing negotiations to secure any brand-name products.

CALIFORNIA

Aerospace Parts Supply Companies Indicted for Fraud Involving Components

Hydroform USA, Inc., a major aerospace parts supplier, and its subsidiary, Temperform USA, LLC, along with company managers Mario Curiel, Gabriel Camacho and Eutiquio Sauceda, were indicted on charges of improperly processing and then falsely certifying the quality of aircraft and aerospace parts used in over 60 Department of Defense, National Aeronautics and Space Administration, and commercial aerospace programs. Hydroform sells aircraft parts, including wing components, landing gear and fuselage, to aerospace companies. Temperform was responsible for strengthening the parts through a manufacturing process called heat-treating

Hydroform is charged with two counts of conspiracy and 10 counts of making false statements. Temperform is charged with two counts of conspiracy and 32 counts of making false statements. Curiel is charged with one count of conspiracy and seven counts of making false statements. Camacho is charged with one count of conspiracy and 16 counts of making false statements. Sauceda is charged with one count of conspiracy and four counts of false statements. The charges of making a false statement and conspiracy each carry a maximum sentence of 5 years' imprisonment and a $250,000 fine for each count for the individuals, and 5 years' probation and a $500,000 fine for the companies.

U.S. Attorney and SEC Bring Fraud Charges Against Former Officers of U.S. Wireless, Inc.

Separate criminal and civil charges were brought against Oliver Hilsenrath and David Klarman, the former Chief Executive Officer and former General Counsel, respectively, of U.S. Wireless, Inc. According to the criminal indictment, Hilsenrath and Klarman allegedly participated in a fraudulent scheme to cause U.S. Wireless to issue stock options and shares to shell corporations located in the British Virgin Islands and under their ownership and control. Hilsenrath and Klarman allegedly caused U.S. Wireless to make monthly, multi-thousand dollar payments via wire transfer to their offshore shell corporations as payments for bogus consulting agreements. The indictment also alleges that Hilsenrath and Klarman concealed their misappropriation of the company's stock and money by causing U.S. Wireless to make materially false and misleading statements in its 1998, 1999, and 2000 annual reports to the SEC.

After the fraud was discovered, U.S. Wireless restated its financial results by increasing its fiscal year 2000 loss by more than 55%. NASDAQ discontinued trading the stock after the company publicly disclosed the fraud.

Both Hilsenrath and Klarman were indicted on three counts of securities fraud, in violation of 15 U.S.C. ' 78ff, which carries a maximum penalty of 10 years' imprisonment and a $1 million fine. In addition, Hilsenrath was indicted on 33 counts of wire fraud, and Klarman was indicted on 16 counts of wire fraud, in violation of 18 U.S.C. '' 1343 and 1346. Each wire fraud violation carries a maximum penalty of 5 years in prison and a $250,000 fine.

MICHIGAN

Michigan Executive Charged in Kickback Scheme

Larry E. Bennett, the President of Premiere Video, Inc., was charged with wire fraud in connection with an alleged kickback scheme used to defraud an unnamed Troy, MI, audio-visual company. Bennett allegedly paid money via wire transfer to an executive of the Troy audio-visual company in exchange for that executive's continued support in the contract negotiations between the Troy company and Premier Video for duplicating and distributing videotapes.

The wire fraud charge, in violation of 18 U.S.C. '' 1343 and 1346, carries a maximum penalty of 5 years in prison, 3 years of supervised release, and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.

NEW YORK

Former New York Advertising Executive Pleads Guilty to Conspiracy Charge

Barry Holland, a former vice president of the Manhattan advertising company Transportation Displays Inc., pleaded guilty to a fraud charge relating to his alleged involvement in a conspiracy in which he allegedly received approximately $176,000 in kickbacks from The Color Wheel Inc., a printing vendor. According to the one-count charge, Holland received kickbacks from The Color Wheel in exchange for steering contracts to that company from approximately 1991 through 2000.

The conspiracy charge, in violation of 18 U.S.C. ' 371, carries a maximum penalty of 5 years in prison, 3 years of supervised release, and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine. In addition, if convicted, the defendant could be ordered to pay restitution to any victim for the full amount of that victim's loss.

This is the latest charge to arise from the ongoing federal antitrust investigation of bid rigging, bribery, fraud, and tax-related offenses in the advertising and printing/graphics industries. On March 25, 2003, Haluk K. Ergulec, the former owner of The Color Wheel, was sentenced to 37 months in prison and ordered to pay $1.5 million in restitution.

TEXAS

Five Former 'Smart-Mart' Officers Indicted

Timothy A. McMurray, Bradley D. Woy, Edward M. Stanton, Kenny J. Davis, and Susan McMurray were each indicted for one count of securities fraud, in violation of 15 U.S.C. '' 77q(a) and 77x; six counts of mail fraud, in violation of 18 U.S.C. ' 1341; nine counts of wire fraud, in violation of 18 U.S.C. '1343; and ten counts of interstate transportation of money taken by fraud, in violation of 18 U.S.C. '' 2314 and 2. Woy, Stanton, Davis, and Susan McMurray also were charged with an additional four counts of interstate transportation of money taken by fraud and an additional 24 counts of wire fraud.

Timothy McMurray was a founder and former President and CEO of Smart-Mart. Woy was the former Chief Operating Officer and CEO after McMurray's resignation. Stanton was a founder and former Senior Vice-President in charge of product procurement. Davis was a founder and former Vice-President in charge of marketing. Susan McMurray was the Vice-President in charge of women's services.

According to the indictment, from March 1998 through July 1999, the defendants engaged in a scheme to defraud people through the United States and Canada, who were induced to invest money in Smart-Mart and purchase its stock. In the course of offering and selling stock, the defendants allegedly made numerous false representations with the intent to defraud, including that Smart-Mart was a thriving company, positioned for substantial growth, financially sound, and had sufficient capital and resources to operate. According to the indictment, in reality, Smart-Mart's sales were minimal. It had few products to sell on its Web site, and no real ongoing negotiations to secure any brand-name products.