2001-07-27 -- Koles, Pamela -- Guilty Plea -- News Release
Corporate Travel Manager Admits Embezzling More Than $3 Million From Multi-National Co.
NEWARK - The former manager of travel services at a multi-national corporation pleaded guilty today to defrauding her employer of more than $3.1 million and to evading income taxes on the stolen proceeds, U.S. Attorney Robert J. Cleary announced.
Pamela Koles, 54, of Jersey City, admitted before U.S. District Judge Alfred J. Lechner, Jr. that she diverted more than $3.1 million from The BOC Group from 1995 through February 2000, according to First Assistant U.S. Attorney Stuart Rabner.
BOC, a multi-national corporation headquartered in the United Kingdom, is a major producer and marketer of industrial gases throughout the world, with operations in more than 50 countries. Its U.S. operations are based in Murray Hill.
Cleary thanked BOC for its extensive cooperation during the investigation.
Koles faces a maximum sentence of five years in prison and a $250,000 fine on the mail fraud charge, and up to five years in prison and a $100,000 fine on the tax evasion charge. Judge Lechner set sentencing for Nov. 7.
BOC employed more than 35,000 people worldwide and used a centralized, in-house travel services group to coordinate business travel arrangements for its employees. The company's global travel expenses exceeded $60 million annually.
Koles was hired as the manager of travel services for BOC in September 1988 and oversaw travel operations for the company.
Koles pleaded guilty to mail fraud and tax charges today, relating to a false invoicing scheme she carried out in her position as head of the travel services unit. As part of the scheme, Koles admitted she prepared and approved hundreds of false check requests for outside travel vendors, credit card companies, and airlines. According to the six-count Information to which she pleaded guilty, Koles completed the payment request forms, which she had arranged to be signed in blank by someone she supervised. On the forms, Koles requested that checks be prepared to various outside vendors for miscellaneous - and false - travel-related expenses. She provided false explanations for the expenses listed and directed that the completed BOC checks be sent to her.
Koles today admitted that she prepared and approved hundreds of check request forms to obtain the following payments:
• more than $1 million in BOC checks made payable to Rosenbluth International. Rosenbluth was a travel agency with offices onsite at BOC in Murray Hill. Koles exchanged BOC checks made payable to Rosenbluth for traveler's checks at Rosenbluth's offices. She admitted using a substantial part of the traveler's checks to gamble at London casinos.
• more than $1.2 million in checks made payable to American Express. According to the Information, these payments covered the cost of various personal items Koles charged on her company credit card, including restaurant charges, clothing and accessories, food bills, and other purchases. The payments also covered the cost of business expenses for which BOC had separately reimbursed Koles.
• more than $689,000 in checks made payable to MBNA and Citibank. Koles admitted that these payments covered the cost of large cash withdrawals and personal items she charged on her personal credit cards. According to the Information, these charges included the cost of renovation work at a Florida residence, clothing and accessories, specialty food purchases, and other items.
• more than $57,000 in checks made payable to United Airlines. Koles admitted these payments covered the cost of business expenses for which BOC had separately reimbursed her.
• nearly $100,000 in checks made payable to Continental Airlines. According to the Information, these payments covered the cost of personal travel to Palm Beach by Koles, a friend, and relatives of the friend.
Koles admitted that she mailed the various checks to the credit card companies and airlines.
According to the Information, Koles did not report the $3,122,267 in proceeds from her false invoicing scheme on her personal income tax returns with one exception: after her fraudulent scheme was detected, Koles filed a 1999 tax return listing $416,859 in miscellaneous income, representing income diverted from BOC and used for gambling in London casinos. For that calendar year, Koles diverted a total of $1,142,585 from BOC.
For the period from 1995 through 1999, Koles evaded approximately $984,907 in tax liability on her overall income. In addition to the mail fraud charge, Koles pleaded guilty to one count of tax evasion, and admitted to the conduct alleged in all six counts, all of which will be considered at sentencing.
Under U.S. Sentencing Guidelines, Judge Lechner will determine Koles's actual sentence based on a formula that takes into account the severity and characteristics of the offense and the defendant's criminal history, if any.
Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.
Under an Information, a defendant waives the right to have her case presented to a federal grand jury and, instead, pleads guilty to charges presented by the government.
Koles was released on a $100,000 personal recognizance bond.
Cleary credited Special Agents of the IRS Criminal Investigation section, under the direction of IRS District Director Anne D. Fahy, and Postal Inspectors with the U.S. Postal Inspection Service, under the direction of Inspector in Charge Kevin J. Burke, for developing the case against Koles.
The government is represented by First Assistant U.S. Attorney Rabner.
Peter Willis, Esq. Jersey City