|
TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a Newtown, Pa., man was indicted
today on charges that while serving as the
CEO of two Burlington Township manufacturing
companies owned by his wife’s extended
family, he stole more than $2.3 million
from the companies through various schemes.
His wife was charged with conspiring with
him in connection with over $1.2 million
of the alleged thefts.
According
to Director Taylor, the former CEO, Michael
Geiger, 51, of Newtown, Pa., is also charged
with stealing $1.4 million from New Jersey’s
unemployment insurance trust fund by implementing
a “rolling layoff” program and
instructing his employees to collect unemployment
insurance benefits while still working by
fraudulently underreporting their hours
and wages.
According
to Director Taylor, the 15-count indictment
charges Geiger with first-degree conspiracy
and various counts of first- and second-degree
money laundering, second-degree theft, and
second-degree misconduct by a corporate
official. Geiger was CEO of American Casein
Company (“AMCO”) and American
Custom Drying Company (“ACD”)
from 2004, when he was hired by the late
founder of the companies, his wife’s
grandfather, until 2009, when he was removed
after stockholders discovered suspicious
expenditures. His wife, Donna Geiger, 48,
is named in nine counts charging the couple
with first-degree conspiracy, first-degree
money laundering, and various counts of
second-degree theft and second-degree money
laundering.
“As
CEO, this defendant had a fiduciary duty
to act honestly to advance the financial
interests of these companies and their shareholders.
Instead, he allegedly stole over $2.3 million
from them, conspiring with his wife to use
company funds to buy a Porsche and two vacation
homes, among other things,” said Attorney
General Dow.
“We
have made prosecuting major financial crimes
a priority,” said Director Taylor.
“In these tough economic times, we
stand ready to aggressively investigate
and prosecute allegations of dishonest operators
stealing from businesses, investors or consumers.”
On
Aug. 30, Deputy Attorney General Valerie
A. Noto of the Division of Criminal Justice
Specialized Crimes Bureau took a guilty
plea from a man who runs a company that
supplied products to AMCO and AMC. Hugh
Henley, 65, of Delray Beach, Fla., president
of Prestige Technology Corporation of Boca
Raton, Fla., pleaded guilty before Superior
Court Judge Pedro J. Jimenez Jr. in Mercer
County to second-degree money laundering
for submitting false invoices to help Geiger
misappropriate funds. The state will recommend
that Henley be sentenced to seven years
in state prison and be ordered to pay a
$250,000 anti-money laundering penalty.
AMCO
specializes in products made from casein,
which is a milk and cheese protein used
to make foods, plastics, adhesives, paints
and other goods. AMCO manufactures powdered
protein ingredients for foods, beverages,
cosmetics and personal care products. It
also manufactures protein polymers for technical
applications. ACD provides spray drying,
blending, packaging and re-bagging services
for the chemical and food industries. The
companies bought most of the casein products
they used in their operations from Prestige
Technology.
The
indictment alleges that Michael Geiger –
and Donna Geiger, where indicated below
– stole the following amounts from
AMCO and ACD through the schemes that are
outlined. One scheme involved a dummy corporation
they formed, DMG Automotive Inc. of Newtown,
Pa., which also is charged in the indictment.
1.
It is alleged that from 2005 through 2009,
Michael and Donna Geiger stole a total of
$398,849 from AMCO and ACD by means of 70
unauthorized company checks and wire transfers
which were made payable to Michael Geiger,
or, in one instance, Donna Geiger.
2.
It is alleged that from 2006 through 2009,
Michael and Donna Geiger had AMCO and ACD
pay a total of approximately $334,734 in
bills for work performed by nine different
contractors or vendors at their home in
Newtown, Pa., including, among other things,
home renovations, concrete work, electrical
upgrades, landscaping, tree work and housekeeping.
3.
It is alleged that between 2006 and 2009,
Michael and Donna Geiger used $75,005 in
additional unauthorized checks from AMCO
and ACD to purchase four vehicles for themselves:
a Porsche, an MG, a GMC Yukon and a Volkswagon
Jetta.
4.
It is alleged that in October 2008, at Michael
Geiger’s direction, Henley generated
four phony invoices from his company, Prestige
Technology, each billing AMCO in the amount
of $164,904. Although AMCO allegedly did
not receive any products from Prestige for
these invoices, Michael Geiger allegedly
had AMCO pay all four invoices. An amount
equal to the total of those invoices, $659,616,
was subsequently wired by Henley from Prestige
to the bank account of DMG Automotive in
October 2008. The investigation revealed
that Michael Geiger wanted to loan the money
to his mother-in-law so that she could pay
estate taxes on the estate of the founder
of AMCO and ACD, which would help Geiger
solidify his control of the companies.
5.
It is alleged that Michael and Donna Geiger
stole $221,186 from AMCO and ADC which they
used to purchase a condominium in Fort Pierce,
Florida, in October 2008. Michael Geiger
directed Henley, through Prestige, to wire
$221,186 to the title company in Florida
that was handling the real estate closing.
The couple allegedly executed a false promissory
note for Henley for that amount. Geiger
allegedly reimbursed Henley by having him
submit phony invoices from Prestige to AMCO
and ADC, which were paid by the companies
in January 2009, even though the companies
did not receive any products for the invoices.
6.
Similarly, it is alleged that the following
year, in October 2009, Michael and Donna
Geiger stole $192,113 from AMCO and ADC
which they used to buy a vacation home in
Cape May, N.J. As in the prior home purchase,
Michael Geiger allegedly directed Henley
to wire the funds from Prestige to the title
company handling the closing. The couple
allegedly executed a false promissory note
for Henley, and Michael Geiger had Henley
submit false invoices from Prestige to AMCO
and ADC to obtain reimbursement. The invoices
were paid in December 2009.
7.
It is alleged that in November 2009, a month
before he was terminated as CEO, Michael
Geiger had two checks issued to himself
from AMCO and ACD for a total of $734,220
in severance pay. The maximum amount that
Geiger was permitted to receive in severance
pay from the two companies under his employment
contract was $300,000 ($150,000 from each
company). It is alleged that Geiger stole
the remaining $434,220 in unauthorized severance
pay.
In
addition to the alleged money laundering
and thefts from AMCO and ACD, the indictment
charges Michael Geiger with stealing $1.4
million in unemployment insurance benefits
by directing employees to underreport their
hours and wages in applications to the state
Department of Labor so they could collect
unemployment benefits. In November 2008,
Geiger implemented a rolling layoff program
in which employees were laid off for one
week per month. From that time until his
termination in December 2009, Geiger allegedly
directed employees to supplement their wages
by filing fraudulent unemployment applications,
which resulted in them receiving about $1.4
million in benefits to which they were not
entitled. After Geiger was fired, the two
companies reached a financial settlement
with the Department of Labor to resolve
the violations.
Deputy
Attorney General Valerie A. Noto presented
the case to the state grand jury. The investigation
was conducted and coordinated for the Division
of Criminal Justice Specialized Crimes Bureau
by Detective Gary O’Brien, Detective
Lynn Patrick Fitzgerald and Deputy Attorney
General Noto, under the supervision of Supervising
Deputy Attorney General Andrew Butchko,
who is Acting Chief of the Specialized Crimes
Bureau.
First-degree
crimes carry a maximum sentence of 20 years
in state prison and a criminal fine of up
to $200,000, while second-degree crimes
carry a maximum sentence of 10 years in
state prison and a criminal fine of $150,000.
The money laundering counts carry an enhanced
fine of up to $500,000, plus an additional
anti-money laundering profiteering penalty
of $500,000 for the first-degree counts
and $250,000 for the second degree counts.
The
indictment is merely an accusation and the
defendants are presumed innocent until proven
guilty.
The
indictment was handed up to Superior Court
Judge Linda R. Feinberg in Mercer County,
who assigned the case to Burlington County,
where the defendants will be ordered to
appear in court to be arraigned on the charges.
A
copy of the indictment is posted with this
release at www.njpublicsafety.com.
The
other shareholders of AMCO and ACD, who
are heirs of the founder of the companies,
Richard Shipley, are involved in ongoing
litigation against Michael Geiger, who has
filed for bankruptcy.
### |
