Business Crimes Hotline

CONNECTICUT

Rubber Chemicals Company Charged in International Price-Fixing Conspiracy

Crompton Corporation, a manufacturer of rubber chemicals based in Middlebury, CT, has agreed to plead guilty to one count under Section 1 of the Sherman Act for participating in an international price-fixing conspiracy, and to pay a $50 million fine. Crompton allegedly conspired with unnamed rubber chemical producers to suppress competition in the rubber chemicals industry from 1995-2001. According to court papers, Crompton and the co-conspirators participated in meetings to set prices of rubber chemicals, raise and maintain prices, and exchange information on the sale of rubber chemicals in the United States and elsewhere. The Antitrust Division of the Department of Justice stated that this case was the first in an ongoing investigation of antitrust violations in the rubber chemicals industry, which has $1 billion of annual sales in the United States.

MARYLAND

Company Comptroller Sentenced for Role in Falsifying Financial Statements

Beverly Baker, the former comptroller of Network Technologies Group, Inc. (NTG), a technology services company that has ceased operations, was sentenced to 24 months in prison and 3 years of supervised release after pleading guilty to charges that she falsified NTG's financial statements. Baker was also ordered to pay approximately $2.95 million in restitution. Baker allegedly intentionally failed to record all of the company's expenses, and falsified information about the status of the company's accounts receivable, which skewed the financial statements by more than $2 million. The false financial information was provided to two companies in the course of soliciting investments from them, and to a bank. Two other former NTG executives are also facing charges in connection with the scheme.

MASSACHUSETTS

Former Gillette Executive Sentenced for Kickback Scheme

The former Director of the Permanent Merchandising Systems Department (PMSD) at the Gillette Company, Gino Deluca, was sentenced to 37 months in prison after pleading guilty to 11 counts of mail fraud and wire fraud, and two counts of filing false tax returns. Deluca was also ordered to pay $724,829 to his former employer, Gillette. The PMSD at Gillette was responsible for the promotion and display of numerous products, including razors, Duracell batteries, and Braun/oral care products. In his capacity as Director of the PMSD, Deluca controlled the distribution of $30-$40 million a year in contracts. Deluca allegedly received nearly $600,000 in kickbacks, in both cash and tangible items, from four vendors to whom he steered business. He also allegedly instructed one of the vendors to prepare inflated invoices to Gillette, which Deluca approved for payment. He then instructed that same vendor to send him $40,000 in a series of $8000 checks, which Deluca allegedly used for a down-payment on a condominium, and a vacation to Aruba.

MINNESOTA

Disaster Recovery Company and Executives Charged with Fraud and Money Laundering

Kieger Enterprises, Inc. (KEI) and three of its former executives, Edward Kieger, Jr., Patrick Iwan, and Joseph Dreshar, have been charged with multiple counts of mail fraud, wire fraud, and money laundering in connection with KEI's contracts to engage in clean-up at some natural disaster sites and the World Trade Center site. Allegedly, KEI and the three executives engaged in a scheme to submit inflated invoices for services performed. According to the indictment, KEI, Kieger, Jr., Iwan, and Dreshar submitted bills and documents falsely showing that employees and equipment were being used when they were not, and showing exaggerated amounts of debris requiring removal. In some instances, additional debris allegedly was trucked in from other job sites.

The defendants also allegedly defrauded corporate customers by making bribes and giving kickbacks. A former roofing manager for Target Corporation, David Poindexter, has also been charged for mail fraud, wire fraud, and money laundering in connection with work that KEI performed for Target. Poindexter allegedly received numerous gifts and other benefits from KEI in exchange for contracting with KEI.

The charges were the result of investigation by a number of federal entities, including the Department of Homeland Security and Office of Inspector General, and also involved assistance from the Loss Prevention Department of Target Corporation.

WASHINGTON

Norwegian Ship Operator Pleads Guilty to Waste Dumping Charges in Three Jurisdictions

H'egh Fleet Services A/S, a Norwegian cargo ship operator, pleaded guilty in federal court in Tacoma to seven felony counts filed by United States Attorneys in Los Angeles, San Francisco and Seattle, including obstruction and making false statements. H'egh Fleet Services allegedly falsified records and concealed evidence of intentional dumping of waste oil into the ocean. An engineering officer on the marine vessel H'egh Minerva, Vincent Genovana, has also pleaded guilty to falsifying documents, and was sentenced to 30 days in custody and 2 years of supervised release as a result of his cooperation in the investigation.

The H'egh Minerva allegedly put in place a bypass pipe to circumvent an oily water separator on board the ship, so that oily water collecting in the lower compartments of ship was not properly processed. According to the plea agreements, which were filed in Tacoma, WA, Los Angeles and San Francisco, the ship's crew also failed to record discharges of waste water in the Oil Record Book as required by international and U.S. law. Crew members of the H'egh Minerva allegedly removed the bypass pipe and painted over its fittings to conceal use of the pipe, and presented Coast Guard inspectors with the falsified Oil Record Book in both Richmond, CA, and at the Port of Vancouver, WA. A whistleblower on the ship brought the activity to the attention of the Coast Guard in Richmond. The plea agreements require H'egh Fleet Services to pay a fine of $3.5 million and develop an environmental compliance plan for its fleet of 38 ships that call on U.S. ports, and provides for a 4-year probation period. If approved by the court, the fine will be shared among the three districts in which charges were filed.

CONNECTICUT

Rubber Chemicals Company Charged in International Price-Fixing Conspiracy

Crompton Corporation, a manufacturer of rubber chemicals based in Middlebury, CT, has agreed to plead guilty to one count under Section 1 of the Sherman Act for participating in an international price-fixing conspiracy, and to pay a $50 million fine. Crompton allegedly conspired with unnamed rubber chemical producers to suppress competition in the rubber chemicals industry from 1995-2001. According to court papers, Crompton and the co-conspirators participated in meetings to set prices of rubber chemicals, raise and maintain prices, and exchange information on the sale of rubber chemicals in the United States and elsewhere. The Antitrust Division of the Department of Justice stated that this case was the first in an ongoing investigation of antitrust violations in the rubber chemicals industry, which has $1 billion of annual sales in the United States.

MARYLAND

Company Comptroller Sentenced for Role in Falsifying Financial Statements

Beverly Baker, the former comptroller of Network Technologies Group, Inc. (NTG), a technology services company that has ceased operations, was sentenced to 24 months in prison and 3 years of supervised release after pleading guilty to charges that she falsified NTG's financial statements. Baker was also ordered to pay approximately $2.95 million in restitution. Baker allegedly intentionally failed to record all of the company's expenses, and falsified information about the status of the company's accounts receivable, which skewed the financial statements by more than $2 million. The false financial information was provided to two companies in the course of soliciting investments from them, and to a bank. Two other former NTG executives are also facing charges in connection with the scheme.

MASSACHUSETTS

Former Gillette Executive Sentenced for Kickback Scheme

The former Director of the Permanent Merchandising Systems Department (PMSD) at the Gillette Company, Gino Deluca, was sentenced to 37 months in prison after pleading guilty to 11 counts of mail fraud and wire fraud, and two counts of filing false tax returns. Deluca was also ordered to pay $724,829 to his former employer, Gillette. The PMSD at Gillette was responsible for the promotion and display of numerous products, including razors, Duracell batteries, and Braun/oral care products. In his capacity as Director of the PMSD, Deluca controlled the distribution of $30-$40 million a year in contracts. Deluca allegedly received nearly $600,000 in kickbacks, in both cash and tangible items, from four vendors to whom he steered business. He also allegedly instructed one of the vendors to prepare inflated invoices to Gillette, which Deluca approved for payment. He then instructed that same vendor to send him $40,000 in a series of $8000 checks, which Deluca allegedly used for a down-payment on a condominium, and a vacation to Aruba.

MINNESOTA

Disaster Recovery Company and Executives Charged with Fraud and Money Laundering

Kieger Enterprises, Inc. (KEI) and three of its former executives, Edward Kieger, Jr., Patrick Iwan, and Joseph Dreshar, have been charged with multiple counts of mail fraud, wire fraud, and money laundering in connection with KEI's contracts to engage in clean-up at some natural disaster sites and the World Trade Center site. Allegedly, KEI and the three executives engaged in a scheme to submit inflated invoices for services performed. According to the indictment, KEI, Kieger, Jr., Iwan, and Dreshar submitted bills and documents falsely showing that employees and equipment were being used when they were not, and showing exaggerated amounts of debris requiring removal. In some instances, additional debris allegedly was trucked in from other job sites.

The defendants also allegedly defrauded corporate customers by making bribes and giving kickbacks. A former roofing manager for Target Corporation, David Poindexter, has also been charged for mail fraud, wire fraud, and money laundering in connection with work that KEI performed for Target. Poindexter allegedly received numerous gifts and other benefits from KEI in exchange for contracting with KEI.

The charges were the result of investigation by a number of federal entities, including the Department of Homeland Security and Office of Inspector General, and also involved assistance from the Loss Prevention Department of Target Corporation.

WASHINGTON

Norwegian Ship Operator Pleads Guilty to Waste Dumping Charges in Three Jurisdictions

H'egh Fleet Services A/S, a Norwegian cargo ship operator, pleaded guilty in federal court in Tacoma to seven felony counts filed by United States Attorneys in Los Angeles, San Francisco and Seattle, including obstruction and making false statements. H'egh Fleet Services allegedly falsified records and concealed evidence of intentional dumping of waste oil into the ocean. An engineering officer on the marine vessel H'egh Minerva, Vincent Genovana, has also pleaded guilty to falsifying documents, and was sentenced to 30 days in custody and 2 years of supervised release as a result of his cooperation in the investigation.

The H'egh Minerva allegedly put in place a bypass pipe to circumvent an oily water separator on board the ship, so that oily water collecting in the lower compartments of ship was not properly processed. According to the plea agreements, which were filed in Tacoma, WA, Los Angeles and San Francisco, the ship's crew also failed to record discharges of waste water in the Oil Record Book as required by international and U.S. law. Crew members of the H'egh Minerva allegedly removed the bypass pipe and painted over its fittings to conceal use of the pipe, and presented Coast Guard inspectors with the falsified Oil Record Book in both Richmond, CA, and at the Port of Vancouver, WA. A whistleblower on the ship brought the activity to the attention of the Coast Guard in Richmond. The plea agreements require H'egh Fleet Services to pay a fine of $3.5 million and develop an environmental compliance plan for its fleet of 38 ships that call on U.S. ports, and provides for a 4-year probation period. If approved by the court, the fine will be shared among the three districts in which charges were filed.