Business Crimes Hotline

FLORIDA

Rhino Ecosystems Executives Plead Guilty

Charles Joseph Cini, former president of Rhino Ecosystems Inc. (Rhino), and Mark Wiertzema, former chief financial officer, pleaded guilty in the United States District Court for the Southern District of Florida to conspiracy to commit wire and securities fraud. Rhino is a publicly traded corporation that purportedly developed and marketed a grease-trapping filtration plumbing product for restaurants and food-processing businesses.

According to the indictment, Cini, Wiertzema and their co-defendants allegedly agreed to pay approximately $6 million in an undisclosed kickback to an undercover FBI agent and others to induce a fictitious foreign mutual fund to buy approximately 650,000 shares of overpriced Rhino stock for a total of $8.6 million. Cini and Wiertzema also allegedly agreed to assist in artificially increasing the market price of Rhino stock upon the sale of the 650,000 shares of Rhino stock and were to receive a portion of the undisclosed kickback payment for their role in the stock transaction.

Cini and Wiertzema each face a maximum statutory sentence of 5 years' imprisonment on the conspiracy count and a fine of up to $250,000.

ILLINOIS

Former Chairman and CFO of Anicom Indicted in Corporate Fraud Scheme

Scott Anixter, former chairman of the board of the now-defunct Anicom, Inc., and former Chief Financial Officer Donald Welchko were indicted in Chicago for allegedly engaging in a corporate fraud scheme by inflating sales and revenues by tens of millions of dollars beginning approximately 3 years before the company went bankrupt. According to the indictment, Anixter and Welchko, along with various co-schemers, allegedly created fictitious sales of at least $24 million, understated expenses, and overstated net income and earnings by millions of dollars, knowing that the materially false financial information was being provided to investors, auditors, lenders and security regulators.

Anicom was a national distributor of wire and cable products, such as fiber optic cable, based in Rosemount, Illinois. Anicom's shares were publicly traded on NASDAQ until trading was halted on July 18, 2002, when Anicom announced that it was conducting an investigation into possible accounting irregularities and that investors should not rely on its 1998 and 1999 financial statements.

Both Anixter and Welchko were each charged with three counts of securities fraud, five counts of bank fraud, five counts of making false statements to financial institutions, and seven counts of making false statements to the SEC. Welchko alone was charged with an additional count of making false statements to the SEC, four counts of falsifying Anicom's financial books and records, and a single count of obstruction of justice in connection with the SEC's investigation.

If convicted of securities fraud, Anixter and Welchko each face a maximum penalty of 10 years in prison and a $1 million fine on each count. The remaining charges against Welchko and Anixter carry the following maximum penalties on each count: bank fraud and making false statements to financial institutions — 30 years' imprisonment and a $1 million fine; making false statements to the SEC — 5 years' imprisonment and a $250,000 fine; and falsifying books and records — 10 years' imprisonment and a $1 million fine. The obstruction charge against Welchko carries a maximum penalty of 5 years' imprisonment and a $250,000 fine. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

FLORIDA

Rhino Ecosystems Executives Plead Guilty

Charles Joseph Cini, former president of Rhino Ecosystems Inc. (Rhino), and Mark Wiertzema, former chief financial officer, pleaded guilty in the United States District Court for the Southern District of Florida to conspiracy to commit wire and securities fraud. Rhino is a publicly traded corporation that purportedly developed and marketed a grease-trapping filtration plumbing product for restaurants and food-processing businesses.

According to the indictment, Cini, Wiertzema and their co-defendants allegedly agreed to pay approximately $6 million in an undisclosed kickback to an undercover FBI agent and others to induce a fictitious foreign mutual fund to buy approximately 650,000 shares of overpriced Rhino stock for a total of $8.6 million. Cini and Wiertzema also allegedly agreed to assist in artificially increasing the market price of Rhino stock upon the sale of the 650,000 shares of Rhino stock and were to receive a portion of the undisclosed kickback payment for their role in the stock transaction.

Cini and Wiertzema each face a maximum statutory sentence of 5 years' imprisonment on the conspiracy count and a fine of up to $250,000.

ILLINOIS

Former Chairman and CFO of Anicom Indicted in Corporate Fraud Scheme

Scott Anixter, former chairman of the board of the now-defunct Anicom, Inc., and former Chief Financial Officer Donald Welchko were indicted in Chicago for allegedly engaging in a corporate fraud scheme by inflating sales and revenues by tens of millions of dollars beginning approximately 3 years before the company went bankrupt. According to the indictment, Anixter and Welchko, along with various co-schemers, allegedly created fictitious sales of at least $24 million, understated expenses, and overstated net income and earnings by millions of dollars, knowing that the materially false financial information was being provided to investors, auditors, lenders and security regulators.

Anicom was a national distributor of wire and cable products, such as fiber optic cable, based in Rosemount, Illinois. Anicom's shares were publicly traded on NASDAQ until trading was halted on July 18, 2002, when Anicom announced that it was conducting an investigation into possible accounting irregularities and that investors should not rely on its 1998 and 1999 financial statements.

Both Anixter and Welchko were each charged with three counts of securities fraud, five counts of bank fraud, five counts of making false statements to financial institutions, and seven counts of making false statements to the SEC. Welchko alone was charged with an additional count of making false statements to the SEC, four counts of falsifying Anicom's financial books and records, and a single count of obstruction of justice in connection with the SEC's investigation.

If convicted of securities fraud, Anixter and Welchko each face a maximum penalty of 10 years in prison and a $1 million fine on each count. The remaining charges against Welchko and Anixter carry the following maximum penalties on each count: bank fraud and making false statements to financial institutions — 30 years' imprisonment and a $1 million fine; making false statements to the SEC — 5 years' imprisonment and a $250,000 fine; and falsifying books and records — 10 years' imprisonment and a $1 million fine. The obstruction charge against Welchko carries a maximum penalty of 5 years' imprisonment and a $250,000 fine. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.