Former Corporate Executives Plead Guilty To Securities Fraud And Tax Offenses For Wide-Ranging Commercial Bribery Scheme
Two Coral Gables residents pled guilty today before U.S. District Judge Jose J. Martinez to their participation in a scheme to obtain more than $9.5 million in kickbacks and other benefits, and to conceal this illicit income from the IRS, while employed as senior executives at Systemax, Inc. (“Systemax”) and its subsidiary, TigerDirect, Inc. (“TigerDirect”).
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office, made the announcement.
Carl Fiorentino, 57, pled guilty to one count of conspiracy to commit mail and wire fraud, and one count of tax evasion. According to his plea agreement, Carl Fiorentino has also agreed to forfeit, among other things, $1,961,049.90 which represents proceeds traceable to his criminal conduct.
Gilbert Fiorentino, 54, pled guilty to one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the Internal Revenue Service. According to his plea agreement, Gilbert Fiorentino has also agreed to forfeit, among other things, 99 gold coins that he received as a part of the kickback scheme.
According to admissions in the defendants’ plea agreements and made in court at the time they entered their pleas, Gilbert Fiorentino served until 2011 as a director of Systemax, was the Chief Executive Officer of the company’s Technology Product Group, and worked at Systemax’s Miami offices; Carl Fiorentino served until 2011 as the president of TigerDirect and worked at Systemax’s Miami offices as a senior executive responsible for sourcing and purchasing computer and electronics peripherals from third party vendors, some of them located in Asia.
Between 2003 and 2011, the defendants received kickbacks from, among others, among others, a Taiwan-based supplier, RICI International and its affiliates. Carl Fiorentino received in excess of $9.5 million in kickbacks; Gilbert Fiorentino received more than $600,000 in kickbacks including, among other things, approximately $200,000 in gold coins. In addition, as a part of the scheme, both misappropriated Systemax merchandise. Carl Fiorentino used the proceeds of his illegal activity to obtain, among other things, a Coral Gables luxury waterfront property, artwork, home furnishings and high-end electronics. Both defendants admitted that, as a result of their kickback scheme, they caused Systemax to pay more for goods and services than it would have in the absence of the schemes. Additionally, both men failed to disclose to the IRS, and pay taxes upon, the income they received as a part of their criminal conduct.
Both defendants concealed from Systemax and its auditors the payments they received pursuant to the kickback scheme. Accordingly, Systemax, unaware that the defendants had received payments and engaged in fraudulent activities, filed inaccurate statements with the U.S. Securities and Exchange Commission as a result.
When Carl Fiorentino learned that federal agents were investigating his conduct, he illegally instructed certain witnesses to conceal the truth from the agents.
This case was originally investigated by the U.S. Attorney’s Office for the Eastern District of New York with the assistance of the FBI New York Field Office and the IRS-CI Miami Field Office. Carl Fiorentino was previously charged in the Eastern District of New York on June 18, 2013, with conspiracy to commit mail and wire fraud, multiple counts of mail and wire fraud, and money laundering. The case involving Carl Fiorentino was transferred to the Southern District of Florida by court order on January 6, 2014. Both Carl and Gilbert Fiorentino are scheduled to be sentenced on February 10, 2015, at 1:30 p.m.
Mr. Ferrer and Ms. Lynch commended the investigative efforts of the FBI and IRS-CI. The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy of the Southern District of Florida and Whitman G.S. Knapp of the Eastern District of New York.
A copy of this press release may be found on the website of the United States Attorney’s for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.