News

Woman Sentenced in $12 Million Contracting Fraud Scheme


Laundered $3 Million in Profits;
Understated Over $7 Million in Individual and Corporate Taxes

FOR IMMEDIATE RELEASE
April 23, 2009

Baltimore, Maryland - U.S. District Judge Andre M. Davis sentenced Georgette Richie, age 51, of Dillwyn, Virginia, today to 37 months in prison followed by three years of supervised release for conspiring to commit mail fraud, money laundering and filing a false tax return, in connection with a scheme to defraud the company where her ex-husband worked of over $12 million, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Davis also ordered Richie to pay restitution of $4,071,000, including forfeiting several properties in Virginia and one in West Palm Beach, Florida.

According to her guilty plea, AMPORTS, Inc. operated a national import/export car processing service for automobile manufacturers from five locations, 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. He approved invoices for payment once the contracts were completed. Phillip Richie was named as an alleged co-conspirator in the scheme, although he was never charged; he died in Dillwyn, Virginia in November 2004.

Georgette and Phillip Richie created two companies, Webster General, Inc. and Geo Tech Systems, Inc., using the name and social security number of a dead man as the president of both companies, in order to conceal their ownership and control of Webster General and Geo Tech from AMPORTS. From September 2000 to July 2003, Phillip Richie awarded AMPORTS construction contracts to these companies. Geo Tech and Webster General received over $12 million which they used to pay various subcontractors who performed the actual work, and they pocketed about $4 million in profits. As part of the scheme, Phillip Richie changed the scope of the contract work in discussions with subcontractors to reduce expenses. Phillip and Georgette Richie opened accounts with internet banks for which the purported “president” of Webster General and Geo Tech would not have to appear in person to establish the account. They hired employees for Webster General and Geo Tech to sit in a construction trailer located at AMPORTS in Baltimore to create the appearance that Webster General and Geo Tech were actual companies.

Ms. Richie also prepared the 2001 and 2002 corporate tax returns for Webster General and Geo Tech which substantially understated their gross income. For 2001 and 2002, Webster General received $2,341,000 more than Ms. Richie reported to the IRS, creating additional income tax liability of $811,159 for the two years. For 2002, Geo Tech received over $3 million more than Ms. Richie reported to the IRS, creating additional income tax liability of $1,034,845.

Mr. and Ms. Richie spent money directly from the Webster General and Geo Tech
bank accounts. In addition, they transferred money to themselves and to two limited liability corporations that they had established. The corporations purchased houses and raw land on Maryland’s Eastern Shore. Ms. Richie willfully understated the limited liability corporations’ gross income on their tax returns for 2001 and 2002 and falsely reported her own income on her personal tax returns by willfully understating her gross income by $40,000 for tax year 2001 and $998,472 in tax year 2002. Her unreported income results in additional tax due of $370,075 for the two years.

The total amount of proceeds attributable to the scheme is $4,071,000.

“Taxes are essential to ensure the smooth and efficient operation of our government. Honest, hardworking Americans pay the price when others choose to evade their tax obligations,” stated C. Andre' Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “Money laundering is not a victimless crime; the underground, untaxed economy harms the entire nation’s economic strength.”

United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service and Internal Revenue Service - Criminal Investigation for their investigative work, and commended Assistant United States Attorney Joyce K. McDonald, who prosecuted the case.

 

 

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