TRENTON
-Attorney General Peter C. Harvey and
Vaughn L. McKoy, Director, Division of
Criminal Justice, announced that the Division
of Criminal Justice has charged a New
York/New Jersey businessman, his wife,
and an associate with concocting a classic
“bust out” scheme that defrauded
wholesale vendors marketing computer systems
and equipment out of at least two million
dollars in credit, cash, and merchandise.
Attorney General Harvey noted that the
Division
of Criminal Justice - Major Financial
Crimes Bureau is targeting financial crime
through the investigation and prosecution
of business-related scams, including business,
mortgage, real estate, investment, and
securities fraud, predatory lending practices,
government contract fraud, and other crimes
that impact New Jersey’s corporate
citizens, residents, consumers, government
agencies, and economy.
According to Criminal Justice Director
McKoy, a five-count State Grand Jury indictment
charged George Liu, 60, 7002 Boulevard
East, Guttenberg, Hudson County, his wife,
Margaret Song, aka Yumei Song, 48, and
Hilton Gbolie, 49, Loxahatchee, FL, with
first degree criminal conspiracy and money
laundering, theft by deception (2nd degree),
and misconduct by corporate officials
(2nd degree). If convicted on all charges,
the defendants face more than 20 years
in state prison and fines exceeding $800,000.
The State Grand Jury indictment alleges
that from December, 1998 through July,
2001, the defendants established Gayer
Computer Corporation (GCC), 600 Meadowlands
Parkway, Secaucus, Hudson County, as a
national wholesale re-seller and distributor
of IBM clone computers, components and
peripherals.
The indictment charges that the defendants
used the corporation as a “bust
out” operation by knowingly submitting
false information on credit applications
to Dunn & Bradstreet and other credit-monitoring
institutions, including fraudulent financial
statements and false company information.
Based on the false financial information,
vendors extended lines of credit to GCC,
selling tens-of-thousands of dollars in
computer equipment to the company on credit.
While GCC made minimal payments to the
vendors to induce the shipment of future
and larger amounts of computer equipment,
it is charged that all payments eventually
stopped. The indictment further alleges
that GCC re-sold the fraudulently obtained
computer systems and equipment for large
profits. The profits were, in turn, used
to repeat the cycle of obtaining lines
of credit from vendors, paying for initial
shipments of equipment in order to obtain
larger shipments, and then eventually
defaulting on payment to the vendors and
declaring bankruptcy.
The investigation by the Division of Criminal
Justice - Major Financial Crimes Bureau
determined that Liu, the owner of numerous
New York City businesses, including a
night club, a Chinese furniture and jade
importing company, and at least two New
York-based computer resale companies,
enlisted a business associate to incorporate
GCC in New York and New Jersey in 1998
and 1999. Gbolie, who had extensive experience
in the computer industry, was responsible
for GCC’s day-to-day operations.
Song, Liu’s wife, was employed as
the GCC bookkeeper. The Major Financial
Crimes Bureau has identified eight corporate
victims of the alleged scheme:
-
Bell Microproducts,
with a financial loss of $122,538;
-
Soyo Tek, Inc.,
with a financial loss of $95,745;
-
Daewoo Electronics,
with a financial loss of $48,984;
-
Cambridge Computer,
with a financial loss of $23,500;
-
LG Electric,
with a financial loss of $54,023;
-
Ingram, Inc.,
with a financial loss of $399,609;
-
SED International,
with a financial loss of $86.101;
-
Techworks, Inc.,
with a financial loss of $888,770.
“The
indictment alleges that the defendants
established a dummy corporation with the
intention of defrauding legitimate vendors
in order to pocket significant profits
and to finance personal expenses. The
Division of Criminal Justice and the Major
Financial Crimes Bureau is targeting unscrupulous
businessmen who endeavor to defraud the
marketplace and who, by their actions,
jeopardize corporate and economic security,”
Director McKoy said.
The State Grand Jury indictment was handed-up
to Mercer County Superior Court Judge
Linda R. Feinberg on April 15. The defendants
will be scheduled to appear in Hudson
County Superior Court for arraignment
and bail. The investigation was coordinated
by Supervising Deputy Attorney General
Terrence Hull and State Investigator Robert
Walker of the Division of Criminal Justice
- Major Financial Crimes Bureau. The Federal
Bureau of Investigation, Newark Office,
initiated the investigation.
The Division of Criminal Justice - Financial
Crimes Bureau encourages anyone who has
information about any type of financial
crime, or who believe they are a victim
of a financial crime, to contact the Division
of Criminal Justice Crime TipLine at 1-866-TIPS-4CJ
(1-866-847-7425). Additional information,
including a copy of the State Grand Jury
indictment, is available by logging on
to the Division of Criminal Justice Web
site at www.njdcj.org.
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