Jeffrey G. Collins
                                                                                                   United States Attorney
                                                                                                   Eastern District of Michigan

                                                                                                   Suite 2001
                                                                                                   211 West Fort Street
                                                                                                   Detroit, Michigan 48226-3277
 

For IMMEDIATE  RELEASE
Contact: Gina Balaya (313) 226-9758
                 Stephen Moore - IRS 313-628-3307
 

May 23, 2003
 
 
 

Two former executives of a Detroit auto supply business were indicted Tuesday by a federal grand jury on federal conspiracy, money laundering, tax and mail fraud charges relating to their participation in a $6.5 million kickback scheme, United States Attorney Jeffrey Collins announced. Indicted were Kenneth J. Graham, the former chief executive officer of Thyssen, Inc., N.A., headquartered in Detroit, Michigan, and Kyle E. Dresbach, its former executive vice-president, said Collins, who was joined in the announcement by Mark Kroczynski, Special Agent in Charge of Internal Revenue Service Criminal Investigation.

Kenneth J. Graham, 66, of Bloomfield Hills, Michigan, and Kyle E. Dresbach 67, of West Bloomfield Township, Michigan, were charged with conspiring with each other and their attorney, Jerome Jay Allen, to commit mail fraud, tax and money laundering offenses. According to the indictment, the conspiracy began in 1991 and continued into 2001. The defendants were further indicted on separate counts of laundering of monetary instruments and subscribing to false individual income tax returns.

Jerome Jay Allen, 65, of Bloomfield Hills, Michigan, has entered into a plea agreement with the U.S. Attorney for the Eastern District of Michigan and the U.S. Department of Justice, Tax Division, which was filed today, in which he agreed to plead guilty to a criminal information charging him with conspiring to commit mail fraud and tax offenses.

Thyssen is in the business of providing steel to the automotive industry and, as of October 1, 1998, was a subsidiary of ThyssenKrupp AG, a German corporation. From 1991 through 2000, Thyssen expanded its operations by constructing various steel processing plants in Detroit, Michigan and Richburg, South Carolina.

According to the indictment, part of Graham's responsibilities included authorizing the expenditure of corporate funds for the purchase of multi-million dollar cranes and slitting machines, and part of Dresbach's responsibilities included recommending and determining which crane and slitting machine vendors would be awarded contracts.

According to the indictment, Graham and Dresbach caused Thyssen to enter into contracts with third-party vendors to purchase the multi-million dollar cranes and slitting machines at fraudulently inflated prices. According to the indictment, the defendants caused the vendors to submit fraudulently inflated invoices to Thyssen, which were sent through the United States mail. The indictment further alleges that kickbacks were paid with a portion of the funds that Thyssen used to pay the inflated invoices.

According to the indictment and plea agreement, Jerome Jay Allen, in exchange for a portion of the kickbacks, laundered the proceeds of the mail fraud scheme through numerous bank accounts he controlled, including client trust accounts maintained by his law firms, Jerome Jay Allen, P.C. and Allen & Defrain, P.C. The indictment alleges that approximately $6.5 million of kickbacks were paid to entities controlled by Jerome Jay Allen, which he split with Kenneth Graham and Kyle Dresbach. According to the indictment, Jerome Jay Allen used kickback funds from his client trust fund accounts to pay Graham's and Dresbach's personal expenses.

Mr. Collins stated, "In March 1998, the indictment states, as part of a money laundering scheme, Mr. Graham caused a payment of $45,000 of criminally derived monies to be given to Britt Marie Graham. In November 1998, Mr. Graham also purchased a 1999 Porsche Coupe from Braman Motorcars with $59,567.93 of criminally derived monies. In June and July 1998, Mr. Dresbach used $25,000 and $29,500 of criminally derived monies, payable to Kennico Construction, for improvements to the real estate located at 4659 Linwood Street, West Bloomfield, Michigan." 

Mr. Collins stated, "Both Mr. Graham and Mr. Dresbach signed their 1997 and 1998 personal tax returns, under penalties of perjury, which did not report any of the proceeds of the scheme as income."

Mr. Collins stated, "As a result of these indicted offenses, the United States Attorney's Office is seeking the forfeiture of the real estate located at 4659 Linwood Street, West Bloomfield, Michigan, and the real estate located at 3305 Windsor Boulevard, Vero Beach, Florida, and an amount of not less than $6,583,072.80 in United States Currency, or the amount that is proved at trial in this matter."

Mr. Kroczynski stated that, "It's a priority of Federal Law Enforcement to investigate allegations of corporate fraud, which have effected the lives of so many citizens. A role of the Internal Revenue Service in this area is to apply the tax laws with integrity and fairness to all. In short, all taxpayers, be they corporations or individuals, must pay their fair share, otherwise honest taxpayers are at a distinct disadvantage in today competitive business atmosphere. All income is taxable, including kickbacks and embezzlement, as alleged in this indictment. Corporate officers should be cognizant of the fact that the Internal Revenue Service Criminal Investigation will hold them accountable for any behavior to the contrary.

An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.

Mr. Collins commended the special agents of the Internal Revenue Service Criminal Investigation for their work in this investigation. Further questions can be directed to Trial Attorneys John Sullivan and Richard Rolwing, Department of Justice, Tax Division, Washington, D.C. at (202) 514-5150, who are assigned to prosecute the case.