By Ogozi John
The former co-owner and chief financial officer of a New Jersey-based company has been sentenced to 21 months in prison for his role in a corporate fraud case.
Jonathan Wheeler, 46, of Southport who was the co-owner and chief financial officer of G3K, a company that provided in-store displays for retailers, was also ordered by U.S. District Judge Jed S. Rakoff to forfeit $957,435.
Three other executives of the company namely; Steven Kaitz, Latchmee “Robbie” Mahato and Zachary Katz were also sentenced on different charges in relation to the elaborate scheme to defraud G3K’s lenders and customers out of millions of dollars.
Another conspirator, Kathleen Smith, was also charged as a defendant in the case.
According to the indictment, from 2012 to 2014, Steven Kaitz, Mahato, Wheeler, and others engaged in a scheme to falsely inflate G3K’s revenue and accounts receivable in order to deceive various lenders, including Veritas Financial Partners, LLC, and MVC Capital, Inc., into lending at least $18.6 million to G3K.
They made use of several other misrepresentations in order to sustain the scheme and keep it concealed from the lenders.
Steven Kaitz, Mahato, and Wheeler created fake email accounts that belonged to fictitious employees of Foot Locker and Adidas, their two biggest customers. They used these fake emails to ‘verify’ false information that they provided themselves regarding G3K’s sales and accounts receivables, which was then sent to G3K’ lenders and external auditors. They went further with creating shell companies, carrying out ‘round-trip’ transactions that gave the false impression that customers were paying outstanding receivables to G3K.
Zachary Kaitz also used his skills in graphics design to create fake invoices, purchase orders, and bills of lading, to support the false representations to the lenders about G3K’s business.
All these financial misrepresentations enabled GSK to obtain more funds from lenders, and most of these funds were misappropriated with about $2.8 million of the loan proceeds diverted for personal use that included paying for homes, luxury cars, private school tuition, and personal credit card bills, as well as kickbacks to Smith.
All five defendants have pleaded guilty in the case and in addition to their prison sentences, the four executives have been ordered to pay 18,687,518 in restitution, while Kathleen Smith is scheduled to be sentenced on October 16, 2015.