Ex-Wife Pleads Guilty in $12 Million Contracting Fraud Scheme
Understated Corporate and Individual Income on Tax Returns Resulting in
$2,216,029 in Taxes Owed
Baltimore, Maryland - Georgette A. Richie, 50, of Dillwyn, Virginia, (formerly Denton, Maryland) pleaded guilty today to conspiring to commit mail fraud and money laundering, and to signing a false tax return, in connection with a scheme to defraud the company where Ms. Richie’s ex-husband worked of over $12 million, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
According to her plea agreement, AMPORTS, Inc. operated an import/export car processing service for automobile manufacturers from five locations in this country, including Baltimore. Georgette’s former husband, Phillip M. Richie, was AMPORTS’ Director of Engineering, responsible for receiving and analyzing bids from contractors for capital expenditures and maintenance of AMPORTS’ facilities. The indictment named Phillip Richie as a co-conspirator although he was not charged; he died in Dillwyn, Virginia in November 2004.
Georgette helped Phillip Richie create two companies, Webster General, Inc. and Geo Tech Systems, Inc., using the name and social security number of a dead man, Frank Harding, as the president of both companies in order to conceal their ownership and control of the companies from AMPORTS. Phillip Richie used his position at AMPORTS to award construction contracts to these companies and approved invoices from the companies for payment by AMPORTS. Georgette Richie established internet bank accounts for Geo Tech and Webster General, kept the checkbooks for the bank accounts and prepared checks to pay the subcontractors who actually performed the work. She also arranged for two individuals to “staff” a construction trailer at AMPORTS to create the appearance that Webster General and Geo Tech were actual companies.
Georgette Richie prepared the tax returns for Webster General and Geo Tech. She knew that from 2000 to 2002, AMPORTS had paid the two companies over $12.8 million for construction projects and that those companies had paid far less in expenses – which were chiefly payments to subcontractors to perform the work. She substantially understated the income of General Webster on its 2001 and 2002 corporate tax returns by over $2.3 million, thus failing to pay General Webster’s income tax liability of $811,159. She also substantially understated the income of Geo Tech on its 2002 corporate tax return by over $3 million, thus failing to pay Geo Tech’s income tax liability of $1,034,845.
In the course of the scheme, the Richies laundered profits by funneling the money to personal bank accounts and limited liability corporations they created to conceal the funds. They used the limited liability corporations to invest in real estate on Maryland’s Eastern Shore. For tax years 2001 and 2002, Georgette Richie understated $1,038,472 in income on her federal individual income tax returns, thus avoided her personal tax liability of $370,075. She also filed false partnership returns for the limited liability corporations for tax years 2001 and 2002 by understating gross income.
In all, AMPORTS suffered a loss of $4,223,356 as a result of this scheme to defraud. As part of the plea agreement, Richie has agreed to a restitution order in that amount. She has agreed to forfeit three properties in Dillwyn and Louisa, Virginia, and a property in West Palm Beach, Florida.
Richie faces a maximum sentence of five years in prison for the mail fraud and money laundering conspiracy and three years in prison for filing a false tax return. U.S. District Judge Andre M. Davis scheduled her sentencing for July 11, 2008 at 10:00 a.m.
United States Attorney Rod J. Rosenstein praised the U.S. Postal Inspection Service and Internal Revenue Service - Criminal Investigation for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorney Joyce K. McDonald, who is prosecuting the case.