FORMER CEO OF CLOTHING COMPANY ENTERS
GUILTY PLEA TO MAIL FRAUD AND FILING FALSE INCOME RETURN

Baltimore-MD- United States Attorney Thomas M. DiBiagio, Lynne A. Hunt, Special Agent in Charge, Federal Bureau of Investigation, Baltimore, and Vicki S. Duane, Special Agent in Charge, IRS-Criminal Investigation Division, announced today that a former CEO of a Frederick clothing manufacturer has pleaded guilty to mail fraud and filing a false income tax return in U.S. District Court in Baltimore.

Benjamin J. Gilbert, 54, of Germantown, Maryland, entered the guilty pleas before the Honorable Benson E. Legg. Gilbert admitted that during the period of 1997-2000, he defrauded his former employer, Hartz and Company, Inc. of more than $200,000, and that he filed false tax returns with the IRS for the years 1997-2000.

According to a Statement of Facts presented to the Court by Assistant United States Attorney Dale P. Kelberman, Gilbert admitted that he falsely stated that he had no liabilities and outstanding judgments against him on mortgage loan applications made between August 28th and September 30, 1998 to Nationsbank, now Bank of America. According to the statement of facts, Gilbert was convicted in June, 1994 of numerous felonies in Easton, Pennsylvania arising out of a previous embezzlement from another company, Easton International Hosiery, Inc. of Easton, Pa. As part of the sentence imposed upon him for the Pennsylvania convictions, Gilbert was ordered to make restitution in the amount of $693,606.72 and a judgment was entered against him for that amount. Gilbert failed to disclose that judgment on mortgage loan applications made to Nationsbank to obtain a $1,590,000 loan to purchase property located at 15330 River Road, Germantown, Maryland.

The evidence further showed that Gilbert was the President and Chief Executive Officer of Hartz and Company, Inc., a clothing manufacturer located in Frederick, Maryland, during the period of August, 1997 through May, 2000. As the CEO of Hartz, Gilbert had the authority to approve payments to third party vendors. In addition, Hartz and Company, Inc. reimbursed Gilbert for personal travel and other expenses which he incurred on behalf of the company.

The mail fraud conviction arose out of a scheme Gilbert devised to defraud Hartz and Company, Inc. of money and property and his honest services as CEO of the company. As part of the scheme to defraud, Gilbert caused the creation of false invoices addressed to Hartz and Company, Inc. for goods and services which had not been provided to the company but had been provided to Mr. Gilbert personally, including lawn care, home improvements, home security services and other personal expenses. Mr. Gilbert, in his capacity as President and CEO of Hartz and Company, approved the payment for those false invoices.

Mr. Gilbert admitted that he used postal money orders for personal expenditures and then submitted the receipts to Hartz and Company, describing the expenses as "casual labor," as part of his expense and travel vouchers. Hartz & Co. was defrauded of more than $200,000 in total. Gilbert is no longer employed by Hartz & Company, which cooperated with the government in the course of the investigation.

Finally, the statement of facts showed that Gilbert evaded more than $79,000 in incomes taxes for the years 1997-2000 by filing false income tax returns for those years. Gilbert intentionally understated all of his taxable income, and tax due, in those years, by not reporting the payments made on his behalf by Hartz.

Judge Legg ordered a presentence report and scheduled sentencing for September 20, 2002 at 10:00 am. The maximum penalty for the mail fraud conviction is five years imprisonment, a $250,000 fine, or both. The maximum penalty for the income tax conviction is three years imprisonment, a $250,000 fine, or both. In addition, the court may order the defendant to make restitution to the victims of the offenses. Because sentencing in federal cases is governed by the United States Sentencing Guidelines, a sentence less than the maximum is likely to be imposed.

The convictions were the product of an investigation conducted by the Internal Revenue Service and the Federal Bureau of Investigation.