Former Corporate Executive Indicted For Executing Fraud And Money Laundering Scheme Involving Over $230 Million In Purchases
An indictment was unsealed this morning in federal court in the Eastern District of New York charging Carl Fiorentino, the former president of computer and electronics seller TigerDirect, with mail fraud, wire fraud and money laundering in connection with a scheme to defraud TigerDirect and its parent company, Systemax, Inc. (“Systemax”). Systemax is a publicly traded company with headquarters in Port Washington, New York. According to the indictment, the defendant personally took over $7 million in commercial bribes and kickbacks in return for steering over $230 million in business to the Taiwanese and California companies that paid the bribes and kickbacks.
The defendant was arrested by federal agents earlier today in Coral Gables, Florida, and a search warrant was executed at his $8 million residence, purchased with fraud proceeds. Later today, the defendant will appear for arraignment before United States Magistrate Judge Edwin Torres in the Southern District of Florida. The criminal case has been assigned to the Honorable Sandra J. Feuerstein, United States District Judge for the Eastern District of New York, in Central Islip, New York.
The arrest and charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Michael DePalma, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, Miami, Florida.
“As alleged in the indictment and court papers, Carl Fiorentino abused his position of trust, employing fraud and deceit to line his own pockets at the expense of his employer and its public shareholders. Fiorentino had it all – a lucrative job and a high-flying lifestyle. But as alleged in the indictment and court papers, his loyalties were neither to his employer nor its public shareholders but solely to himself. Fiorentino’s greed spanned the Pacific Ocean to pull companies from California to Taiwan into his bribery and kickback scheme,” stated United States Attorney Lynch. “We and our law enforcement partners will vigorously pursue and prosecute to the fullest extent of the law those who seek to profit by such fraud.” Ms. Lynch expressed her grateful appreciation to the FBI and IRS for their work on the investigation.
“As alleged, Fiorentino exploited his position to engage in blatant self-dealing. He accepted bribes to abuse his purchasing power and direct company business to specific suppliers. The suppliers’ lavish kickbacks helped finance Fiorentino’s multimillion-dollar home. The FBI will continue to police the kind of insider fraud that victimizes companies and their shareholders,” stated FBI Assistant Director-in-Charge Venizelos.
“IRS Criminal Investigation is committed to unraveling elaborate and complex money laundering schemes leaving no financial stones unturned,” stated Michael J. De Palma, Acting Special Agent-in-Charge of IRS-Criminal Investigation, Miami Field Office. “Those who abuse their position of trust to illegally enrich themselves will be held accountable for their actions.”
Beginning in January 2003 and continuing until April 2011, Fiorentino was the president of TigerDirect, a subsidiary of Systemax, Inc., that sold brand-name computers and its own line of Ultra computers in its retail stores and via mail-order catalogs and the Internet. In 2010 Systemax reported $3.5 billion in net sales according to its 2010 SEC 10K filing. Among his duties as company president, Fiorentino was responsible for selecting suppliers to provide computer components, peripherals and other products to TigerDirect. As alleged in the indictment, beginning in 2003, Fiorentino entered into an illegal agreement with the owner of a Taiwanese company to steer TigerDirect business to his company by directing TigerDirect to purchase the Taiwanese company’s computer components in exchange for bribes and kickbacks that totaled $6.5 million dollars over the course of the conspiracy. In addition, between 2003 and 2007, Fiorentino received another $570,000 in bribes and kickbacks from a California-based company that sold computer memory modules and flash memory products. Fiorentino received the bribes and kickbacks through checks and wire transfers payable to third party individuals and entities that he controlled. Fiorentino used the proceeds of the fraud scheme to buy, among other things, an $8 million home in Coral Gables, Florida.
As a result of the scheme, TigerDirect is alleged to have paid over $157,000,000 for the Taiwanese company’s products and $80,000,000 for the California company’s products. Fiorentino concealed the scheme and kickback payments by submitting false conflict of interest forms to Systemax and using a complex web of wire transfers and shell companies.
The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty. The indictment charges Fiorentino with mail fraud, wire fraud, conspiracy to commit mail and wire fraud and money laundering conspiracy. If convicted, he faces a maximum sentence of 20 years’ imprisonment on each of those charges, forfeiture of the $8 million Coral Gables residence and over $7 million dollars, and a $250,000 fine.
The government’s case is being prosecuted by Assistant United States Attorney Demetri Jones.
Name: CARL FIORENTINO