Two Former Wildwood Industries Employees, Accountant Enter Guilty Pleas In Fraud Conspiracy
Peoria, Ill. – Three people who were formerly employed by or working on behalf of Wildwood Industries of Bloomington, Illinois, entered pleas of guilty today for their respective roles in a fraud conspiracy that resulted in the company obtaining more than $213 million from lenders over a five-year period. The former plant manager for Wildwood Industries, Dominic F. Propersi, 59, of the 1200 block of East Jefferson Street, Bloomington, IL; former employee Kimberly J. Hill, 37, of Rocksbury Drive, Bloomington; and Doyle F. Fry, 74, of Stockton, Missouri, a retired accountant, each waived indictment and pled guilty in separate appearances today before U.S. District Judge Michael M. Mihm in Peoria.
According to court documents, on March 5, 2009, Wildwood was the subject of an involuntary bankruptcy petition. Wildwood’s assets were sold two months later, on May 20, 2009, for approximately $2 million. During the period of the alleged scheme, from 2004 to 2009, Wildwood obtained more than $213 million from approximately 85 lenders.
The charges are the result of an ongoing, cooperative investigation by the Federal Bureau of Investigation; the U.S. Postal Inspection Service; Internal Revenue Service, Criminal Investigation Division; Federal Deposit Insurance Corporation (FDIC); and the U.S. Department of Labor. The cases are being prosecuted by Assistant U.S. Attorney Darilynn J. Knauss.
“I commend the exceptional investigative efforts by these federal agencies following the initial discovery of this massive fraud scheme, which victimized 85 different financial institutions and others,” said Jeffrey B. Lang, Acting U.S. Attorney. “Their cooperative efforts ensured that the full scope of the criminal actions by these three defendants was brought to light.”
Propersi pled guilty to one count of conspiracy to commit money laundering, an offense punishable by a statutory maximum of 10 years in prison and fines of up to $500,000 or twice the value of the property involved in the conspiracy. Hill entered a guilty plea to one count of conspiracy to commit fraud (mail fraud, wire fraud, bank fraud, and theft from employee benefit plan.) Fry pled guilty to a single count of conspiracy to commit fraud (mail fraud, wire fraud, bank fraud). For the offenses of conspiracy to commit fraud, the statutory penalty is up to five years in prison and a fine of up to $250,000. Sentencing for the three defendants has been scheduled on July 29, 2010.
According to the charging document, Propersi was employed as the plant manager for Wildwood Industries, a manufacturer of lawn, leaf and vacuum bags in Bloomington, when he became involved in the scheme to defraud financial institutions and private lenders. As part of the scheme, during today’s court appearance and in court documents, Propersi admitted that he and another individual provided information to a New York business that created false invoices for manufacturing equipment. According to the information, brokers presented the false invoices, along with Wildwood’s financial information and tax returns, to lenders to obtain lease funding for equipment which, in fact, was already owned by Wildwood. According to the information, during the period of the scheme, the New York company did not build or ship any equipment to Wildwood.
After the lender paid the New York company for the non-existent machinery, according to the information, the New York company kept a portion of the funds and forwarded the balance to Wildwood’s account. When lenders sent inspectors to view the machinery, Propersi admitted that he showed them a machine that Wildwood already owned. To further the deception, Propersi admitted that he created and affixed false serial number plates to the machinery, and in some cases the machine was freshly painted to appear new. Propersi admitted he maintained a log identifying the false serial numbers he placed on the machines.
According to court documents, some of the funds obtained from the false invoices were used to make payments for previous fraudulently obtained leases, which used the same existing machinery at Wildwood as collateral. Lenders continued to be deceived by new invoices with different serial numbers for the same machines.
In a separate court appearance, Kimberly Hill, who performed various aspects of financial work at Wildwood Industries for approximately 12 years, admitted that she furthered the conspiracy when she signed delivery and acceptance certificates to give the appearance that machinery was produced and delivered to Wildwood. As part of the scheme, Hill admitted she falsely recorded the reason for incoming wires from the New York company in the records of Wildwood. Further, Hill admitted that in 2009, she failed to forward funds to benefit plan administrators which were withheld from employees’ payroll checks for benefit plans, including medical, dental, 401(k), and disability.
The third defendant, Doyle Fry, performed accounting services for Wildwood beginning in about 1981. Although Fry sold his practice and moved to Missouri in 1998, he continued to perform accounting services for Wildwood until 2008. One of the services Fry performed through the years was the annual compilation of Wildwood’s financial statements which Fry understood were provided to prospective lenders.
Beginning with the 2004 compilation, according to court documents and during his court appearance, Fry admitted that he came to suspect and believe that Wildwood was not using all of the loan proceeds to purchase machinery and was improperly accounting for those funds received as revenue and/or using them to pay off older loans. Fry admitted that in 2005 he was directed to falsify Wildwood’s financial statements and underlying records, including tax returns, to conceal the receipt of money that had been wired to Wildwood and to inflate the company’s financial condition. Fry admitted he created and provided false financial statements and underlying materials to an accounting firm conducting reviews of Wildwood’s financial statements for the years 2004 to 2007. Further, Fry admitted that, at another’s direction, he prepared false Federal Income Tax returns for Wildwood and others based on Wildwood’s false financial statements.
James A. Lewis
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