News and Press Releases

Mark Hotton and Five Others Indicted for Orchestrating Multi-million Dollar Wire Fraud and Money Laundering Scheme

FOR IMMEDIATE RELEASE
October 15, 2012

Hotton Will Be Arraigned on Indictment Today in Long Island Courthouse

Earlier today, an indictment was unsealed charging a former stockbroker, Mark Hotton, and five others with conspiracy to commit wire fraud and money laundering in connection with a scheme to defraud others of more than $3.7 million.1 Hotton, his wife Sherri Hotton, and associates Marianne Mexdorf, Denise Labriola, and Michael Scibelli were arrested this morning by federal agents, and are scheduled to be arraigned this afternoon before United States Magistrate Judge Arlene R. Lindsay at the United States Courthouse in Central Islip, New York. A sixth defendant, David Blass, is a fugitive. The case has been assigned to United States District Judge Joanna Seybert.

The indictment and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Toni Weirauch, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and Robert Panella, Special Agent-in-Charge, U.S. Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud, New York.

Hotton and his co-defendants operated three electrical contracting companies in Farmingdale, New York. As alleged in the indictment and in court papers filed today, the defendants fraudulently created false invoices purporting to represent money owed by third parties and sold these purported debts to companies known as factors. Factors routinely advance businesses money against a percentage of the value of the invoices, or accounts receivable, purchased. In this case, the defendants allegedly created some $9.8 million in false accounts receivable from which the defendants obtained more than $3.7 million in advances from the victim factors. The indictment further alleges that Hotton and others paid co-defendant David Blass, the former Assistant Director of Facilities Engineering for Maimonides Medical Center in Brooklyn, $6,000 a month to falsely represent to the factoring companies that the fraudulent invoices for work supposedly performed at the hospital were genuine.

“As set forth in the indictment, the defendants created transactions and debt out of whole cloth in order to deceive businesses whose goal was to provide capital to legitimate concerns. The victims thought they were helping struggling companies. Instead, they were bilked out of millions through false documents, fraud and deceit,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the U.S. Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud.

IRS-CI Acting Special Agent-in-Charge Weirauch stated, “IRS-Criminal Investigation stands ready to lend its financial investigative expertise to complex fraud cases whenever possible. We are pleased to work with our law enforcement partners in order to fully uncover the extent of the alleged scheme and the harm to the defrauded investors.”

If convicted, the defendants face up to 20 years’ imprisonment on each count. The indictment also seeks forfeiture from the defendants of $3.7 million.

The government’s case is being prosecuted by Assistant United States Attorneys Burton T. Ryan and Karen Hennigan.

The Defendants:

MARK C. HOTTON
Age: 46
West Islip, New York

DAVID BLASS, also known as “Martin Geller”
Age: 60

SHERRI HOTTON, also known as “Sherri Johnson”
Age: 43
West Islip, New York

DENISE HOTTON LABRIOLA
Age: 50
West Islip, New York

MARIANN MEXTORF
Age: 51
Farmingdale, New York

MICHAEL SCIBELLI
Age: 54
West Babylon, New York

 

 

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1 The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.



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