Business Crimes Hotline

CALIFORNIA

Defense Contractor Pleads Guilty to Unlawful Campaign Contributions

Parthasarathi Majumder and his company, Science and Applied Technology, Inc. (SAT), pleaded guilty to conspiring to defraud the United States as a result of providing illegal campaign contributions to several members of Congress. SAT also pleaded guilty to making unlawful campaign contributions in violation of 2 U.S.C. ' 441(b), the Federal Election Campaign Act.

The plea agreement acknowledged that from 1993-1998, Majumder solicited employees, subcontractors, and friends to make contributions to politicians he believed could affect the awarding of business to SAT. In some instances, Majumder allegedly reimbursed some of these donors by providing them with cash payments, writing personal checks, instructing SAT to pay them bonuses, and/or instructing subcontractors to inflate labor hours to compensate for the contributions. Majumder's reimbursements allegedly exceeded $20,000. As a result of these reimbursements, campaign treasurers for the congressmen to whom donations were made were unwittingly caused to file false reports with the FEC, misidentifying the actual source of the funds.

According to the plea agreement, Majumder also allegedly converted funds received from federal contracts to lobby members of Congress in connection with an Advanced Anti-Radiation Guided Missile Program being developed by SAT. The United States has paid SAT over $150 million for that program. The plea agreement also stated that Majumder created false expenses on SAT's corporate tax return to deduct lobbying and other expenses.

Majumder and SAT previously paid the United States $3,049,098 for violations of the False Claims Act in a civil settlement agreement.

MARYLAND

Lending Executive Sentenced for Role in Telemarketing Scheme

Mark Forrest Cohn, the former executive vice president and general counsel of Four Star Financial Services, LLC (Four Star), was sentenced for his role in a telemarketing scheme after being convicted on charges of mail fraud, wire fraud, and conspiracy. Cohn was sentenced to 57 months in prison followed by 3 years of supervised release, and a criminal fine of $150,000.

Four Star was a California corporation that specialized in lending and factoring to businesses. The company had made loans throughout the 1990s to Joel Katz, a Baltimore telemarketer, and starting in 1999, lent money to Katz to fund a program that offered a credit card or extension of credit to consumers, for prices ranging from $49.95-$149.95. Rather than providing an actual credit card to consumers as suggested in the phone calls, the telemarketing company allegedly sent consumers lists of banks to which they could apply for credit, a coupon book, and a CD rom.

When Katz did not make sufficient payments on his loans to Four Star, Cohn and Four Star allegedly became more involved in the telemarketing program and eventually effectively removed Katz, continuing, however, to market the same program to consumers. Cohn and Four Star allegedly concealed their interest in the program. The program allegedly defrauded more than 31,000 consumers of over $3.6 million.

Three other defendants have pleaded guilty to mail or wire fraud, and four defendants, including Mark Cohn, Four Star, and Joel Katz, were convicted at trial. The defendants have received sentences ranging from 10 to 97 months in prison.

NEW JERSEY

Petroleum Products Executive Sentenced Under Clean Air Act

Thomas M. Hayes, the former vice president of Western Hemisphere Operations for Saybolt Inc., a petroleum products testing company, was sentenced to 57 months in prison for conspiracy to violate the Clean Air Act, making false statements to the EPA, committing mail fraud, and obstructing justice.

Evidence presented at Hayes' trial showed that he directed a number of Saybolt employees to falsify reports that gasoline and other products met government requirements and contract requirements when he knew that they did not. One of those standards pertained to reformulated gasoline, which is required to be used in a number of metropolitan areas to reduce ozone air pollution. According to evidence presented at trial, the fraud was designed to help Saybolt keep customers who sold substandard reformulated gasoline and other products. The conspiracy allegedly was carried out from as early as September 1992 until approximately November 1996.

Saybolt, Inc., Saybolt North American Inc., and three former employees had previously pleaded guilty to conspiracy to violate the Clean Air Act.

CALIFORNIA

Defense Contractor Pleads Guilty to Unlawful Campaign Contributions

Parthasarathi Majumder and his company, Science and Applied Technology, Inc. (SAT), pleaded guilty to conspiring to defraud the United States as a result of providing illegal campaign contributions to several members of Congress. SAT also pleaded guilty to making unlawful campaign contributions in violation of 2 U.S.C. ' 441(b), the Federal Election Campaign Act.

The plea agreement acknowledged that from 1993-1998, Majumder solicited employees, subcontractors, and friends to make contributions to politicians he believed could affect the awarding of business to SAT. In some instances, Majumder allegedly reimbursed some of these donors by providing them with cash payments, writing personal checks, instructing SAT to pay them bonuses, and/or instructing subcontractors to inflate labor hours to compensate for the contributions. Majumder's reimbursements allegedly exceeded $20,000. As a result of these reimbursements, campaign treasurers for the congressmen to whom donations were made were unwittingly caused to file false reports with the FEC, misidentifying the actual source of the funds.

According to the plea agreement, Majumder also allegedly converted funds received from federal contracts to lobby members of Congress in connection with an Advanced Anti-Radiation Guided Missile Program being developed by SAT. The United States has paid SAT over $150 million for that program. The plea agreement also stated that Majumder created false expenses on SAT's corporate tax return to deduct lobbying and other expenses.

Majumder and SAT previously paid the United States $3,049,098 for violations of the False Claims Act in a civil settlement agreement.

MARYLAND

Lending Executive Sentenced for Role in Telemarketing Scheme

Mark Forrest Cohn, the former executive vice president and general counsel of Four Star Financial Services, LLC (Four Star), was sentenced for his role in a telemarketing scheme after being convicted on charges of mail fraud, wire fraud, and conspiracy. Cohn was sentenced to 57 months in prison followed by 3 years of supervised release, and a criminal fine of $150,000.

Four Star was a California corporation that specialized in lending and factoring to businesses. The company had made loans throughout the 1990s to Joel Katz, a Baltimore telemarketer, and starting in 1999, lent money to Katz to fund a program that offered a credit card or extension of credit to consumers, for prices ranging from $49.95-$149.95. Rather than providing an actual credit card to consumers as suggested in the phone calls, the telemarketing company allegedly sent consumers lists of banks to which they could apply for credit, a coupon book, and a CD rom.

When Katz did not make sufficient payments on his loans to Four Star, Cohn and Four Star allegedly became more involved in the telemarketing program and eventually effectively removed Katz, continuing, however, to market the same program to consumers. Cohn and Four Star allegedly concealed their interest in the program. The program allegedly defrauded more than 31,000 consumers of over $3.6 million.

Three other defendants have pleaded guilty to mail or wire fraud, and four defendants, including Mark Cohn, Four Star, and Joel Katz, were convicted at trial. The defendants have received sentences ranging from 10 to 97 months in prison.

NEW JERSEY

Petroleum Products Executive Sentenced Under Clean Air Act

Thomas M. Hayes, the former vice president of Western Hemisphere Operations for Saybolt Inc., a petroleum products testing company, was sentenced to 57 months in prison for conspiracy to violate the Clean Air Act, making false statements to the EPA, committing mail fraud, and obstructing justice.

Evidence presented at Hayes' trial showed that he directed a number of Saybolt employees to falsify reports that gasoline and other products met government requirements and contract requirements when he knew that they did not. One of those standards pertained to reformulated gasoline, which is required to be used in a number of metropolitan areas to reduce ozone air pollution. According to evidence presented at trial, the fraud was designed to help Saybolt keep customers who sold substandard reformulated gasoline and other products. The conspiracy allegedly was carried out from as early as September 1992 until approximately November 1996.

Saybolt, Inc., Saybolt North American Inc., and three former employees had previously pleaded guilty to conspiracy to violate the Clean Air Act.