F&S OIL COMPANY AUDITOR
ADMITS ROLE IN BANK FRAUD SCHEME
The United States Attorney for the District of Connecticut announced that DALE K. CICCARELLI, 57, of Southbury, waived his right to indictment and pleaded guilty today before Senior United States District Judge Alfred V. Covello in Hartford to one count of conspiracy to commit bank fraud and one count of aiding and assisting the filing of a false federal tax return. The charges stem from CICCARELLI’s role in a scheme by principals of F&S Oil to defraud Citizens Bank of millions of dollars.
According to court documents and statements made in court, CICCARELLI, a Certified Public Accountant, served as the external auditor for F&S Oil Company Inc. (“F&S Oil”), which was in the business of providing heating oil to residential and commercial customers in the Waterbury area.
As primarily a seasonal business with fluctuating cash flow, F&S Oil needed access to a banking line of credit to conduct its business on an ongoing basis. As a result, F&S Oil had a banking relationship with RBS Citizens, NA, (“Citizens Bank”), which included three outstanding lines of credit or loans secured by the assets, inventory and receivables of F&S Oil. Citizens Bank would routinely extend funds to F&S Oil under the existing line of credit based, in part, on information provided by Christopher Carr, the President of F&S Oil, including F&S Oil’s certified financial statements, and periodic submissions of borrowing base certificates. The borrowing base certificates would itemize F&S Oil’s total gross accounts receivable and would include a listing of the aging of the receivables and a total fuel inventory. In or before August 2006, as F&S Oil experienced cash flow problems, Carr falsified the accounts receivable listed on the borrowing base certificates to support a $4.5 million line of credit from Citizens Bank.
In the Summer of 2006, Carr also falsified F&S Oil’s financial statements, which fraudulently overstated assets and liabilities, namely the accounts receivable and unearned customer payments, in order to support the false figures that had previously been provided to the bank. At that time, when reconciling the financial statements with the detailed F&S Oil books and records, CICCARELLI learned of the discrepancy between the true receivables and those listed on the financial statements and the borrowing base certificates previously provided to the bank. Carr instructed CICCARELLI to adopt the false accounts receivable and unearned customer payments in certifying the financial statements to support the false borrowing base certificates.
On August 24, 2006, CICCARELLI falsely certified the accuracy of F&S Oil’s financial statements for the fiscal year ending March 31, 2006. F&S Oil provided the financial statements to the Citizens Bank, which continued to extend monies on a line of credit until February 2008.
In August 2007, CICCARELLI again falsely certified the accuracy of F&S Oil’s financial statements, which he knew continued to misrepresent the relevant financial information from the 2006 certified financial statements.
In pleading guilty, CICCARELLI also admitted that he knew that Richard A. Stevens, the owner of F&S Oil, and other employees of the company were using F&S Oil monies to pay non-deductible personal expenses, as well as non-deductible wages for no-show employment of others. Nonetheless, CICCARELLI prepared F&S Oil’s corporate federal tax returns, deducting the above items as legitimate deductible business expenses.
Judge Covello has scheduled sentencing for May 1, 2012, at which time CICCARELLI faces a maximum term of imprisonment of eight years.
On May 24, 2011, Carr pleaded guilty to one count of bank fraud. He awaits sentencing.
On August 11, 2010, Stevens pleaded guilty to one count of willfully filing a false U.S. tax return. On March 3, 2011, he was sentenced to five months of imprisonment, followed by five months of home confinement.
This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Christopher W. Schmeisser.
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