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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Thursday, August 10, 2017

Former QVC Director Charged In Million-Dollar Fraud Scheme Involving Hollywood PR Agency and NYC Production Company

PHILADELPHIA – James D. Falkowski, a/k/a “Jamie Falkowski,” 42, of Buffalo, New York, was charged by indictment1, unsealed today, with eleven counts of wire fraud, eleven counts of mail fraud, and one count of conspiracy, announced Acting United States Attorney Louis D. Lappen.

According to the indictment, Falkowski – while working as a QVC Director responsible for enhancing QVC’s brand and reputation in the entertainment and fashion industries – engaged in a multi-layered fraud scheme that enabled him to live a luxury lifestyle through fraud. Falkowski allegedly used a variety of methods to fraudulently obtain from QVC over $1,000,000 worth of money, goods and services, all without QVC’s knowledge or approval. Specifically, the indictment alleges that Falkowski fraudulently caused QVC to pay for: hundreds of thousands of dollars of his personal expenses, including Falkowski’s first-class travel, luxury hotel and resort stays, spa treatments, upscale restaurants, luxury clothing, luxury accessories, and botox treatment; approximately $200,000 in private luxury chauffeur rides for himself and his friends and associates; approximately $70,000 in payments to his personal vendors and creditors, including over $28,000 in payments to a custom furniture maker for two tables for Falkowski’s Philadelphia apartment; and approximately $59,500 in pre-paid American Express, Tom Ford, and Barney’s New York gift cards that he used for himself. Falkowski also entered into fraudulent kickback arrangements with two separate QVC vendors, who collectively paid Falkowski approximately $240,000 as his cut of the kickback arrangement. Allegedly, Falkowski fraudulently abused QVC’s product requisition process to shower his friends and associates with at least tens of thousands of dollars’ worth of QVC products, all at QVC’s expense.

The indictment alleges that Falkowski caused QVC to hire Los Angeles-based PR firm “The Steinberg Group,” d/b/a “dOMAIN” (“TSG”), to serve as QVC’s outside PR agency. After QVC hired TSG, Falkowski allegedly used TSG to “launder” hundreds of thousands of dollars of his personal expenses. Falkowski did this by causing TSG to reimburse him directly for his personal expenses, but after paying Falkowski in the dollar amounts he commanded, TSG subsequently obtained reimbursement from QVC by issuing fraudulent invoices to QVC often written at Falkowski’s direction and, in certain instances, written by Falkowski himself. Those fraudulent invoices, by design, did not reveal to QVC the true nature of Falkowski’s expenses. Falkowski also caused TSG to reimburse him for expenses that he also submitted directly to QVC for reimbursement, thus causing QVC to unknowingly repay him multiple times for the same expenses. And, in some instances, Falkowski allegedly created entirely fake invoices and bills for submission to QVC to hide the true costs of his expenses from QVC. Falkowski also allegedly used a second QVC vendor, “SPEC Entertainment,” d/b/a “CS Global” (“SPEC”), to fraudulently alter invoices that SPEC submitted to QVC to hide the true costs of Falkowski’s expenses – including by reducing the cost of Falkowski’s luxury hotel charges on invoices submitted to QVC by tens of thousands of dollars, and by artificially inflating an event invoice to cover Falkowski’s personal vacation to the Turks and Caicos Islands.

Separately, the indictment alleges that Falkowski entered into fraudulent kickback arrangements with TSG and SPEC – both of which Falkowski caused QVC to hire, and both of whose relationships with QVC Falkowski controlled. Regarding TSG, Falkowski allegedly instructed TSG’s President and TSG’s General Counsel how to become a QVC “vendor representative” and earn royalties from QVC. Falkowski thereafter secretly assisted TSG leadership in negotiating against QVC – his own employer – by providing TSG with QVC’s proprietary contractual information, which enabled TSG leadership to negotiate for, and obtain, a larger royalty percentage over a longer period of time from QVC. In return, TSG leadership secretly cut Falkowski into the deal, and made him their “silent partner” – agreeing to pay Falkowski a kickback of fifty percent (50%) on all royalty payments received from QVC, as well as for funds received from a separate deal related to product sold by a QVC competitor. After Falkowski was terminated by QVC, Falkowski allegedly sent a private email to TSG’s President and TSG’s General Counsel, stating: “Let’s be clear of a few things: [. . . ] You have a better deal [at QVC] than any other rep because of me solely. [ ] we do not have any contract between us of our deal JUST [TSG President’s] word that we split things 50/50 always. This was because of the complications while I was at QVC.” TSG, which did business as “Domain Miami LLC” for its royalty deal with QVC, earned hundreds of thousands of dollars in royalties from QVC pursuant to the deal negotiated with Falkowski’s secret assistance, of which TSG kicked back approximately $160,981.73 to Falkowski as his share of their fraudulent deal.

Falkowski also allegedly entered into a similar fraudulent kickback arrangement with SPEC, pursuant to which he instructed SPEC how to serve as a QVC vendor representative, and in turn was secretly cut into the deal by SPEC as a one-third (33%) partner. SPEC earned hundreds of thousands of dollars in royalties from QVC, of which it kicked back approximately $81,571.23 to Falkowski as his share of their fraudulent deal.

If convicted of all charges, Falkowski faces a potential advisory sentencing guideline range of 108-135 months in prison, three years of supervised release, a possible fine, and a $2,300 special assessment. Restitution may also be ordered.

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney James Petkun.

1An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

Topic(s): 
Financial Fraud
Updated August 10, 2017