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Two remaining defendants sentenced to prison for $11.2 million conspiracy to defraud Wachovia Delmar Dove and Robert Otto Previously Entered Guilty Pleas Carlotte, NC

FOR IMMEDIATE RELEASE
March 15, 2011
Contact: Lia Bantavani
lia.bantavani@usdoj.gov PAO
704-338-3140

United States Attorney Anne M. Tompkins Western District of North Carolina

TWO REMAINING DEFENDANTS SENTENCED TO PRISON FOR $11.2 MILLION CONSPIRACY TO DEFRAUD WACHOVIA Delmar Dove and Robert Otto Previously Entered Guilty Pleas CHARLOTTE, NC – Delmar Dove, 61, of Mint Hill, N.C., and Robert Otto, 67, of Fort Mill, S.C., were sentenced today by U.S. District Judge Max O. Cogburn, Jr. for their role in a conspiracy that defrauded Wells Fargo (formerly Wachovia) of $11.2 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Cogburn sentenced Dove to serve 22 months in federal prison, to be followed by three years of supervised release. Dove was also ordered to pay restitution in the amount of $1,202,945 to Wells Fargo, and $140,734 to the Internal Revenue Service (“IRS”). Otto was sentenced to serve 22 months in prison, to be followed by three years of supervised release, and was ordered to pay $2,600,327 in restitution to Wells Fargo. U.S. Attorney Anne M. Tompkins is joined in making today’s announcement by Keith Fixel, Inspector in Charge of U.S. Postal Inspection Service (USPIS), Charlotte Division Headquarters, Kay B. Jernigan, Acting Special Agent in Charge of the IRS Criminal Investigation Division (IRS-CI), and Special Agent in Charge Tony Underwood of the North Carolina State Bureau of Investigation (NC SBI), Southern Piedmont District.

Dove, who was charged in May 2010 by a criminal bill of information with one count of mail fraud conspiracy and one count of filing a false income tax return, entered his guilty plea in June 2010. Otto was charged under a separate bill of information in June 2010 with one count of mail fraud conspiracy. He pled guilty in July 2010. According to court documents and court proceedings, from at least 2000 through November 2008, Dove, who managed Callaway Farms, LLC (Callaway), based out of Charlotte, and Otto, who owned and operated R.E. Otto and Sons, Inc. (REOS), a home renovation company also based in Charlotte, generated, at the direction of Terry Welch, false invoices to Wachovia for services that were never provided. At the time, Terry Welch served as the Vice President in Utility Services at the Wachovia Distribution Utility Center in Charlotte. As Vice President, Welch oversaw the payment of invoices submitted by outside vendors, such as Callaway and REOS, who purportedly provided goods and services to Wachovia. Welch used his position to lead the conspiracy by Dove, Otto and others to transmit bogus invoices totaling over $11 million through their respective businesses to Wachovia. The invoices, which falsely reflected that actual goods and services were provided to Wachovia, were transmitted to Wachovia by the co-conspirators through the U.S. mail. Thereafter, Wachovia issued payment for the invoices totaling more than $11 million during the nearly eight-year time period of the conspiracy.

According to Court documents, between 2005 and 2006, Dove submitted approximately $1,202,945 in bogus invoices for delivery services which Callaway purportedly provided to Wachovia, and made approximately $558,115 in kickback payments to Welch in connection with the scheme. Court documents also show that between 2000 and 2006, Otto submitted approximately $2,600,327 in fraudulent invoices to Wachovia for “services for Wachovia service center,” when in fact Otto provided renovation services to properties owned by Welch and Welch’s relatives and never provided any services to Wachovia.

Judge Cogburn previously sentenced Welch to serve 70 months in federal prison and ordered him to pay restitution in the amount of $11,221,462 to Wachovia and $1,713,083 to IRS. Welch’s co-defendant, John P. Cousar, Jr., 48, a retired Charlotte firefighter, was previously sentenced to 33 months imprisonment and was ordered to pay restitution in the amount of $5,901,593 to Wachovia and $1,124,448 to the IRS. Another co-defendant, Jerry Little, 51, of Charlotte was earlier sentenced by Judge Cogburn to 15 months imprisonment and ordered to pay restitution in the amount of $1,504,594 to Wachovia.

Dove and Otto have been released on bond since entering their guilty pleas. They will be ordered to report to a federal facility, at which time they will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole. The investigation was conducted by USPIS, IRS-CI, and NC SBI. The case is being handled for the government by Assistant U.S. Attorney Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.


 

 

 

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