Lone Tree Businessman Pleads Guilty To Defrauding The U.S. Government
DENVER – Hemal Ramesh Jhaveri, age 52, of Lone Tree, Colorado, pled guilty this week before Chief U.S. District Court Chief Marcia S. Krieger to conspiracy to defraud the United States, federal authorities announced. Chief Judge Krieger is scheduled to sentence Jhaveri on June 15, 2015. Jhaveri was indicted by a federal grand jury in Denver on August 6, 2014. An information was subsequently filed on March 16, 2015, the same day he pled guilty. Jhaveri is free on bond.
According to information contained in the charging documents and the plea agreement, Jhaveri was the founder, sole owner, and chief executive officer of SofTec Solutions, Inc. of Englewood, Colorado.
Between 2001 and 2010, SofTec Solutions participated in the Small Business Administration’s 8(a) Business Development Program, which was available to small businesses that were owned and controlled by socially and economically disadvantaged individuals. As a result of its participation in the program, the company received United States government contracts under which it provided clerical and administrative support and other services. During the life of the conspiracy, the government paid SofTec Solutions more than $17,000,000 pursuant to those contracts.
As requirements for SofTec Solutions’ continued participation in the program, Jhaveri’s net worth was to remain under $750,000 and his withdrawals from the company were not to exceed $300,000 in any fiscal year. In order to circumvent those limits, Jhaveri, with the assistance of others, diverted money from SofTec Solutions to bank accounts that he controlled and to other places for his personal use and benefit. The government’s position is that the diversions occurred in the years 2006 through 2009 and the total amount of money diverted was $4,494,305.79.
Much of the diverted money moved to bank accounts in California, India, Singapore, and Hong Kong and from those accounts to accounts that Jhaveri controlled. In addition, Jhaveri diverted over $500,000 from SofTec Solutions and used it as part of the purchase price of his $3,000,000 residence in Lone Tree, Colorado. He also arranged for the company to pay the IRS $177,240 to satisfy his personal tax bill. In 2008 and 2009, Jhaveri caused SofTec Solutions to transfer a total of $984,194 to pay expenses related to a restaurant in which he had an interest. In addition, Jhaveri funneled $45,000 from SofTec Solutions to an account of a dormant company and used that money to make his alimony payments.
Jhaveri never informed the SBA that this money had been diverted from SofTec Solutions to his use and benefit. If Jhaveri had provided that information, the SBA would have seen that his withdrawals from the company exceeded $300,000 in each of the years 2006 through 2009 and that his net worth each year was more than he reported to the agency.
Jhaveri willfully failed to report much of the diverted money on his federal income tax returns. The government has taken the position that Jhaveri failed to report $3,349,111 of the diverted money as income on his 2006-09 returns and, as a result, he caused a tax loss of $1,171,179. The government is requesting that Jhaveri be ordered to pay that amount as restitution to the IRS.
Jhaveri pled guilty to one count of conspiracy to defraud the United States, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $250,000.
This case was investigated by IRS – Criminal Investigation, Department of Defense – Office of Inspector General – Defense Criminal Investigative Service, General Services Administration - Office of the Inspector General, Army Criminal Investigation Command – Colorado Fraud Resident Agency – Major Procurement Fraud Unit, Small Business Administration – Office of the Inspector General. The Special Enforcement Program of the Internal Revenue Service assisted in the case. The defendant was prosecuted by the Economic Crime Section of the U.S. Attorney’s Office’s Criminal Division.