2002-03-07 -- Koles, Pamela -- Sentencing -- News Release

NEWARK - The former manager of travel services at a multi-national corporation was sentenced today to 33 months in prison for defrauding her employer of more than $3.1 million and for evading income taxes on the stolen proceeds, U.S. Attorney Christopher J. Christie announced.

U.S. District Judge John C. Lifland also ordered Pamela Koles, 55, of Jersey City, to make full restitution in the amount of $3.12 million - money that she diverted from the BOC Group from 1995 through February 2000, according to Assistant U.S. Attorney Stuart Rabner.

Judge Lifland further ordered Koles to pay federal income taxes and penalties on the $3.12 million in unreported income from the fraud scheme.

BOC, a multi-national corporation headquartered in the United Kingdom, is a major producer and marketer of industrial gases throughout the world, with operations in more than 50 countries. Its U.S. operations are based in Murray Hill.

BOC employed more than 35,000 people worldwide and used a centralized, in-house travel services group to coordinate business travel arrangements for its employees. The company's global travel expenses exceeded $60 million annually. Koles was hired as the manager of travel services for BOC in September 1988 and oversaw travel operations for the company.

Koles, who remains free on a $100,000 personal recognizance bond, will surrender to begin serving her prison sentence on a date to be determined by the U.S. Bureau of Prisons.

Koles pleaded guilty before former U.S. District Judge Alfred J. Lechner Jr. on July 27, 2001.

Koles pleaded guilty to mail fraud and tax charges, relating to a false invoicing scheme she carried out in her position as head of the travel services unit. As part of the scheme, Koles admitted she prepared and approved hundreds of false check requests for outside travel vendors, credit card companies, and airlines. According to the Information to which she pleaded guilty, Koles completed the payment request forms, which she had arranged to be signed in blank by someone she supervised. On the forms, Koles requested that checks be prepared to various outside vendors for miscellaneous - and false - travel-related expenses. She provided false explanations for the expenses listed and directed that the completed BOC checks be sent to her.

Koles admitted that she prepared and approved hundreds of check request forms to obtain the following payments:

• more than $1 million in BOC checks made payable to Rosenbluth International. Rosenbluth was a travel agency with offices onsite at BOC in Murray Hill. Koles exchanged BOC checks made payable to Rosenbluth for traveler's checks at Rosenbluth's offices. She admitted using a substantial part of the traveler's checks to gamble at London casinos.

• more than $1.2 million in checks made payable to American Express. According to the Information, these payments covered the cost of various personal items Koles charged on her company credit card, including restaurant charges, clothing and accessories, food bills, and other purchases. The payments also covered the cost of business expenses for which BOC had separately reimbursed Koles.

• more than $689,000 in checks made payable to MBNA and Citibank. Koles admitted that these payments covered the cost of large cash withdrawals and personal items she charged on her personal credit cards. According to the Information, these charges included the cost of renovation work at a Florida residence, clothing and accessories, specialty food purchases, and other items.

• more than $57,000 in checks made payable to United Airlines. Koles admitted these payments covered the cost of business expenses for which BOC had separately reimbursed her.

• nearly $100,000 in checks made payable to Continental Airlines. According to the Information, these payments covered the cost of personal travel to Palm Beach by Koles, a friend, and relatives of the friend.

Koles admitted that she mailed the various checks to the credit card companies and airlines.

According to the Information, Koles did not report the $3,122,267 in proceeds from her false invoicing scheme on her personal income tax returns with one exception: after her fraudulent scheme was detected, Koles filed a 1999 tax return listing $416,859 in miscellaneous income, representing income diverted from BOC and used for gambling in London casinos. For that calendar year, Koles diverted a total of $1,142,585 from BOC.

For the period from 1995 through 1999, Koles evaded approximately $984,907 in tax liability on her overall income. In addition to the mail fraud charge, Koles pleaded guilty to one count of tax evasion, and admitted to the conduct alleged in all six counts, all of which was considered at sentencing.

Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

Under an Information, a defendant waives the right to have her case presented to a federal grand jury and, instead, pleads guilty to charges presented by the government.

Christie thanked BOC for its extensive cooperation during the investigation.

Christie credited Special Agents of the IRS Criminal Investigation section, under the direction of IRS District Director Anne D. Fahy, and Postal Inspectors with the U.S. Postal Inspection Service, under the direction of Inspector in Charge Kevin J. Burke, for developing the case against Koles.

The government is represented by Assistant U.S. Attorney Rabner.

Defense Attorney:

Peter Willis, Esq. Jersey City