August 18th, 2008
Former Cotton Plant Employee Pleads Guilty to Fraud Charges
Memphis, TN – On August 14, 2008, Dennis O’Connor, 56, of Brighton, Tennessee pled guilty before United States District Court Judge Jon P. McCalla to one count of conspiracy to defraud the United States and one count of filing a false income tax return announced Lawrence J. Laurenzi, Acting United States Attorney for the Western District of Tennessee. O’Connor faces a maximum penalty of 8 years in prison and fine of $500,000 when he is sentenced on January 8, 2009.
According to an Information filed for the plea hearing, O’Connor was an employee of Calcot, Ltd., a cotton marketing cooperative which operated a corporate subsidiary, Global Cotton Recovery (Global), in Covington, Tennessee. On February 25, 2003, Global’s plant in Covington was extensively damaged by fire. O’Connor was responsible for supervising the construction of a new plant in Millington, Tennessee with insurance proceeds received from The Hartford Insurance Company (Hartford). From February 25, 2003, until approximately June 19, 2007, O’Connor devised a scheme where he submitted false and fraudulent invoices and documents to Hartford for payment for equipment that was either never purchased or purchased by Hartford at an inflated price.
During his plea hearing, O’Connor admitted that he directed the preparation of false invoices showing that equipment had been purchased for use in building the Millington plant when little or no equipment had been purchased. The false invoices were then submitted to Hartford for payment of equipment that did not exist. O’Connor also admitted that he set up a shell corporation under the name Specialty Gin and Textile Equipment (Specialty Gin) with another co-conspirator, concealing from Calcot and Global that he was a secret partner. Specialty Gin would locate and purchase cotton gin equipment and then resell the equipment at a much higher price to Hartford, Calcot, and Global. O’Connor and his co-conspirator would then divide the profits from the fraudulent Specialty Gin transactions.
O’Connor also admitted during his plea hearing that he filed a false income tax return with the Internal Revenue Service for calendar year 2004, failing to report approximately $143,450 in gross income.
The case was investigated by FBI and IRS Criminal Investigation. Mr. Laurenzi commended IRS Special Agent Parris Qwon and FBI Special Agent Henry Burch for their investigation of this case. This case was prosecuted by Assistant U.S. Attorney Stephen C. Parker of the U.S. Attorney’s Office for the Western District of Tennessee.
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