Houston Mail Presort Operation Owners and Workers Headed to Federal Prison for Stealing Millions
|Oct. 21, 2011|
Profits from the scheme represent the largest counterfeit postage meter loss in the history of the U.S. Postal Service and the greatest breach of security features of postage meter machines
HOUSTON - Neal Lim, 50, the former owner of one of the largest mail presort operations in the Houston area has been sentenced to 14 years in federal prison, United States Attorney Ken Magidson announced today.
Following a five-day trial in February 2011, Lim was convicted of all seven counts charged against him - conspiracy to commit mail fraud, two counts of mail fraud and four counts of possession of counterfeit postage meter machines. U.S. District Judge Nancy F. Atlas sentenced Lim earlier this year with the last of the defendants sentenced yesterday. Lim was ordered him to pay restitution to the USPS in the amount of $16 million. He will also serve a three-year-term of supervised release to begin following his release from prison.
"In 16 years on the bench, this is the most extensive fraud I have seen outside of securities fraud," Judge Atlas commented. She characterized Lim's scheme as "sophisticated" and a "gross, massive fraud necessitating the involvement of experts to analyze."
On June 17, 2010, a total of six defendants were charged in a seven-count indictment for conspiracy to commit mail fraud by possessing and using counterfeit postage meter machines to affix counterfeit postage in large mailings. The conspiracy resulted in lost revenue of more than $14 million to the U.S. Postal Service (USPS) over a four-year-period. Charges against one of the co-defendants were later dismissed following his death.
Neal Lim owned three companies - Gulf Coast Presort Inc. (GCP), located at 1005 Ennis Street in Houston - one of the largest presort business in Houston; Mail Processing Center Inc. (MPC), 10835 Seaboard Loop in Houston; and a satellite office located at 5940 N. Sam Houston Parkway East, Suite 315, in Humble, Texas. Lim purchased MPC in 1992 and Lim had been the owner of GCP since November 2002. The satellite office was opened in 2005. These businesses operated as third-party mailers and/or pre-sort bureaus that make money by doing big mass mailings for clients and getting discounts from the post office for sorting the mail. Clients of Lim's companies included county offices, financial institutions and other area businesses.
Through a statistical mail sampling process, the USPS determined that the amount of mail observed being processed by the USPS for Lim's companies exceeded the amount of pre-paid postage available on the postage meter machines licensed to Lim's companies, resulting in millions of lost revenue to the USPS over a four-year-period. The scheme involved creating counterfeit postage meter machines to print counterfeit postage on mass mail processed by his presort companies. Illegitimately obtained meters were modified so they would produce counterfeit postage. The businesses collected postage from their mailing customers but didn't pay the post office. In addition to profits from the counterfeit postage, Lim's businesses collected additional money for postal refunds from the post office for having pre-sorted the illegally-metered mail.
Prior to Lim's trial, his four co-defendants pleaded guilty to conspiring to commit mail fraud. Robert Mungai, 41, the manager of MPC and GCP, was sentenced yesterday to 48 months imprisonment followed by three years of supervised release. David Herrera, 44, supervisor at MPC and later owner of Professional Mail Services (PMS) - another presort company involved in the scheme, was sentenced to 54 months imprisonment followed by two years of supervised release. Nicole Garciduenas, 30, a postage meter operator, and Ricardo Garciduenas, 57, a supervisor at GCP, were sentenced to 27 and 48 months, respectively, each to be followed by three years of supervised release. In addition to their prison terms, Mungai, Herrera and Ricardo G. Garciduenas were each ordered to pay jointly and severally $14,687,237 in restitution to the U.S. Postal Service and a $100 special assessment. Nicole Garciduenas was ordered to pay $2 million jointly and severally and a $100 special assessment.
This case was investigated by the United States Postal Inspection Service and was prosecuted by Special Assistant United States Attorney Tammie Y. Moore and Assistant United States Attorney Bertram A. Isaacs.