States Attorney's Office District of Connecticut
|January 19, 2010||
FORMER FURNITURE COMPANY EXECUTIVE SENTENCED TO FEDERAL PRISON FOR CONDUCTING PAY-TO-PLAY SCHEMES
Nora R. Dannehy, United States Attorney for the District of Connecticut, today announced that BENJY ORBACH, 46, of Colchester, was sentenced on Friday, January 15, by United States District Judge Stefan R. Underhill in Bridgeport to 16 months of imprisonment, followed by two years of supervised release, for conducting “pay-to-play” schemes that defrauded his employer of more than $500,000. On October 2, 2009, ORBACH pleaded guilty to one count of mail fraud, one count of income tax evasion and one count of financial structuring.
According to court documents and statements made in court, ORBACH worked as a Vice President of Operations for Raymour & Flanigan, a furniture retailer with stores in Connecticut and other northeastern states. In his position, ORBACH was able to influence Raymour & Flanigan’s selection of various subcontractors. From approximately 2005 through October 2008, ORBACH received kickbacks from a cleaning subcontractor that provided services to Raymour & Flanigan. During the scheme, ORBACH first would regularly meet a representative from the cleaning subcontractor at lunch, or after working hours, and would receive an unmarked manila envelope containing between $8,500 and $23,000 in cash. Later, in lieu of the cash payments, ORBACH arranged for a representative of the cleaning subcontractor to issue periodic checks to ORBACH’s wife as if she worked for the company. While the subcontractor issued a Form W-2 in the amount of $61,506 to his wife, ORBACH failed to report any of the cash payments on his federal tax returns.
ORBACH also demanded kickbacks from another company that provided delivery services to Raymour & Flanigan. Between April 2007 and December 2007, ORBACH received three dollars for every stop serviced by the delivery company. The company made regular payments to ORBACH or his spouse by check, and issued Forms 1099 to each of them.
The investigation revealed that ORBACH would store the cash he received in a safe at his home, periodically structured the funds into a savings account, and then transferred the money into an investment account. For example, on October 28, 2006, ORBACH deposited $9995 into his savings account at one bank branch, and then drove to another bank branch and deposited approximately $500 into the same account.
During the course of the investigation, the IRS executed a seizure warrant and froze more than $350,000 in ORBACH’s investment account.
ORBACH has paid restitution in the amount of $526,815.80 to Raymour & Flanigan, and back taxes, penalties and interest in the amount of $267,505.33.
This matter was investigated by the Internal Revenue Service – Criminal Investigation Division. The case was prosecuted by Assistant United States Attorney Ray Miller.
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