Former Executives Sentenced To Prison For Defrauding Employer Of $1 Million Through Fraudulent Expense Claims
Used Forged Receipts and Invoices in Seven-Year Scheme to Claim Reimbursements for Mislabeled Personal Expenses and Obtain Duplicate Reimbursements
Greenbelt, Maryland – U.S. District Judge Paul W. Grimm sentenced Paul Dunham, age 59, of Northampton, England, formerly of Montgomery County, Maryland, today to 4 years in prison, followed by three years of supervised release, for conspiring to commit wire fraud and for money laundering, in connection with a scheme in which he and his wife, Sandra Dunham, fraudulently requested reimbursement from their employer for purported business expenses, but were instead for mortgage payments on time shares in Barbados, luxury bedding for their home, a dog sofa and other personal expenses. On January 29, 2015, Judge Grimm sentenced Sandra Dunham, age 58, to two months imprisonment, with a reduction of 42 days for time served, for the wire fraud conspiracy. Judge Grimm specified that the remaining 18 days of Mrs. Dunham’s sentence be served in home detention. Judge Grimm also entered an order requiring the couple to forfeit and pay restitution of $1 million, the total losses incurred as a result of the scheme.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
According to their guilty pleas, Paul and Sandra Dunham worked for PACE Worldwide which was located at various times in Maryland and North Carolina, and had a subsidiary in the United Kingdom named PACE Europe Ltd. PACE produced parts for the repair and reworking of electronics for the military and others. Paul Dunham held a number of executive positions, including president and chief operating officer. Sandra Dunham was initially hired to work for the European subsidiary in the accounts department, and eventually became the director of sales and marketing for PACE Worldwide. The Dunhams relocated from the United Kingdom to Maryland and then North Carolina, and were provided with corporate credit cards.
Between 2002 and 2009, Paul and Sandra Dunham fraudulently charged personal expenses to their corporate credit cards and submitted vouchers to PACE for reimbursement that falsely described the expenditures as business expenses. For example, Paul Dunham represented that $3,007 had been spent on meals during business meetings, when in fact the money was spent on luxury bedding for his upscale North Carolina residence. Sandra Dunham sought reimbursement for $8,397 which she represented as expenses incurred to cancel a vacation due to a business meeting, when these expenses were actually mortgage payments the couple made on two separate time share units the couple had purchased in Barbados. Other personal expenses which were falsely described as business expenditures included personal legal fees, expensive furniture, a domed pet residence and a dog sofa.
The couple also fraudulently billed PACE Europe Ltd. for business expenses already paid by PACE Worldwide, obtaining duplicate reimbursements.
In addition, a substantial portion of the scheme involved Paul Dunham abusing a private position of trust to manage and direct others, including his secretary, in the execution of the scheme. Moreover, in an attempt to conceal the scheme, Paul Dunham repeatedly forged receipts and invoices to create the false appearance that they were for business, rather than personal expenses.
United States Attorney Rod J. Rosenstein praised the FBI for its work in the investigation and thanked Assistant United States Attorneys David I. Salem and Leah J. Bressack, who prosecuted the case.