Perpetrators of scheme to defraud staffing companies sentenced to federal prison for conspiracy to commit fraud as well as mail fraud and wire fraud
DENVER – Six defendants from the Colorado Springs area were sentenced, starting last week and concluding today for conspiracy to commit fraud as well as mail fraud and wire fraud, U.S. Attorney John Walsh, FBI Special Agent in Charge in Denver James Yacone, and IRS-Criminal Investigation Acting Special Agent in Charge Lilia Ruiz announced. The lengthy federal prison sentences were handed down by U.S. District Court Judge Christine M. Arguello.
On June 9, 2009, the government obtained a 25-count indictment charging six individuals: David A. Banks, Demetrius K. Harper, Gary L. Walker, Clinton A. Stewart, David A. Zirpolo, and Kendrick Barnes, with various counts of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and an allegation of asset forfeiture. The defendants were found guilty on October 20, 2011, following an approximately three-week trial. All six defendants represented themselves at trial but obtained counsel for sentencing. Each defendant was found guilty of each count in which he was charged, except that David Banks was found not guilty of one of the counts.
The sentences of imprisonment were as follows:
David A. Banks: sentenced to serve 135 months in federal prison
Demetrius K. Harper: sentenced to serve 121 months in federal prison
Gary L. Walker: sentenced to serve 135 months in federal prison
Clinton A. Stewart: sentenced to serve 121 months in federal prison
David A. Zirpolo: sentenced to serve 121 months in federal prison
Kendrick Barnes: sentenced to serve 87 months in federal prison
All six of the defendants were also ordered to pay $5,000,000 in restitution jointly and severally to the 42 staffing companies which were victims of the scheme. Each defendant was taken into custody at the conclusion of the sentencing hearings.
According to the indictment and facts presented during the trial, Banks and his co-defendants were in the process of developing a software program they claimed would be beneficial to law enforcement agencies. The defendants, acting through companies known as Leading Team, Inc. (LT), IRP Solutions Corporation (IRP), or DKH, LLC (DKH), located in Colorado Springs, perpetrated a scheme to defraud victim staffing companies by making false statements to induce 42 staffing companies to payroll employees for them even though they did not any source of income to pay the staffing companies. In many cases, one or more of the defendants themselves reported time to and were paid by a staffing company, while one or more of the other defendants approved the reported time. That staffing company would pay the defendants, but LT/IRP/DKH never paid the invoices from the staffing company. The scheme also included approving and submitting to staffing companies time reporting cards containing false statements about the number of hours worked by employees, the times of day during which employees worked, and/or the nature of the work performed by employees. In total, the defendants defrauded the staffing companies of over $5.1 million.
“Thanks to the thorough investigation by the FBI and IRS-CI, and long hours and excellent legal work by the federal prosecutors on this case, six defendants who defrauded staffing companies of approximately $5,000,000 will be spending a substantial amount of time in prison,” said U.S. Attorney John Walsh.
“The sentences handed down to these defendants appropriately reflects the seriousness of the specific crimes they committed,” said FBI Denver Special Agent in Charge James Yacone. “The number of victims and amount of loss were significant. Hopefully this will serve as a deterrent to others contemplating such crimes in the future.”
“Financial fraud schemes are often described as a house of cards and will eventually fall apart, exposing the individuals responsible,” said Lilia Ruiz, Acting Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “These sentencings send a clear message; there will be consequences for committing such crimes.”
This case was investigated by the FBI Denver Division and IRS-Criminal Investigation.
The defendants were prosecuted by Assistant U.S. Attorneys Matt Kirsch and Suneeta Hazra.