News Release
U.S. Department of Justice
United States Attorney
District of Rhode Island
January 23, 2008
Former Mixitforme president pleads guilty to defrauding credit card company
Cory Johnson, the former president of Mixitforme, a company that sold electronic devices over the Internet and by telephone, pleaded guilty today to fraud and money laundering. Johnson admitted that he defrauded a credit card processing firm out of about $2.2 million worth of customer orders that Mixitforme failed to fulfill.
United States Attorney Robert Clark Corrente announced the guilty plea, which Johnson entered today before U.S. District Court Judge William E. Smith in U.S. District Court, Providence.
At the plea hearing, Assistant U.S. Attorney Andrew J. Reich said the government could prove that, after incorporating Mixitforme in Rhode Island in 2005, Johnson and another representative of Mixitforme submitted an application to NOVA Information Systems to process Mixitforme’s credit card transactions.
As part of the application to NOVA, Johnson and another representative of Mixitforme prepared and submitted various supporting documents, including Johnson’s purported federal income tax returns for 2003 and 2004. Those returns falsely represented that Mixitforme had gross receipts of $365,129 in 2003 and $1,967,327 in 2004. In fact, Mixitforme was not in business in 2003 and 2004, and Johnson’s actual federal tax returns for those years did not reflect any business income from Mixitforme.
Between November 2005 and March 2006, NOVA processed millions of dollars worth of credit card transactions on behalf of Mixitforme for orders the company received over the Internet and by telephone. In March 2006, Mixitforme ceased operations, and hundreds of customers subsequently complained to NOVA that their credit card accounts had been charged for orders to Mixitforme but the merchandise had not been delivered.
NOVA refunded customers a total of $3,178,347 in charges for unfulfilled orders. NOVA was able to recoup $954,460 from a bank, but was left with a net loss of $2,223,887.
Johnson, 29, of Morrisville, Pennsylvania, pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering. He is free on bond pending sentencing, which Judge Smith scheduled for June 20. The maximum prison sentences are: conspiracy -- five years, and money laundering -- ten years. Each offense also carries a maximum fine of $250,000.
On November 21, David Carpenter, of Cranston, pleaded guilty to bribery for writing more than $4,000,000 worth of letters of credit for Mixitforme while he was a branch manager for BankRI and, at the same time, negotiating with Mixitforme for a job.
The U.S. Secret Service, the Internal Revenue Service, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service are conducting the investigation of Mixitforme. Assistant U.S. Attorneys Reich and Lee H. Vilker are prosecuting the case.