Owner of New York Commercial Drum Company Sentenced to Federal Prison for Fraudulent Billing Scheme
The Defendant Submitted False Invoices to Maryland Manufacturers for Undelivered Drums
Baltimore, Maryland – U.S. District Judge Lydia Kay Griggsby sentenced Robert A. DiNoto, age 48, of Huntington, New York, late yesterday to one year of incarceration to be served as six months in federal prison and six months of home detention, followed by three years of supervised release, for conspiracy to commit wire fraud, in connection with a fraudulent billing scheme involving a manufacturing company with facilities in Harford County, Maryland. Judge Griggsby also ordered DiNoto to pay restitution and to forfeit a total of $514,352.
The sentence was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office; and Acting Special Agent in Charge Kareem A. Carter of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
According to his guilty plea, Robert A. DiNoto, is the owner and President of American Pride Distributors (“American Pride”), located in, Woodbury, New York. American Pride sold commercial drum containers used by manufacturers to store and transport products. Robert DiNoto is the brother of Eugene DiNoto (E. DiNoto), a former longtime employee of Company 1, a family-owned global business headquartered in New York, but with manufacturing facilities in Belcamp and Abingdon, Maryland, both in Harford County.
As detailed in his plea agreement, beginning no later than 2014, Robert and E. DiNoto agreed to execute a fraudulent billing scheme to defraud Company 1, through the submission of false invoices for undelivered drums. As the facility manager for Company 1, E. DiNoto oversaw the purchasing and storing of drums for use at the Harford County manufacturing facilities and had the authority to review drum invoices and authorize payments to the drum vendors. Robert DiNoto approached E. DiNoto about how he could start his own drum vending company. E. DiNoto subsequently told Robert DiNoto about other drum vendors that were defrauding Company 1 using a fraudulent billing scheme. Robert DiNoto, who was in the real estate business at the time, decided to use a company he owned, called Sandpiper Properties, Inc., trading as American Pride Distributors, to facilitate the scheme to defraud Company 1.
Once American Pride Distributors was formed, Robert DiNoto began receiving drum purchase orders from E. DiNoto for Company 1 to establish a legitimate pattern of drum sales between American Pride and Company 1. However, because Robert DiNoto was never in the business of manufacturing or reconditioning drums, he filled Company 1’s orders by buying the requisite number of drums from an actual drum manufacturer and arranging to ship them to Company 1’s facilities in Harford County, Maryland. Robert DiNoto billed Company 1 for the drums using American Pride invoices, which E. DiNoto approved for payment via emails to Company 1’s accounting department in New York.
Soon thereafter, Robert DiNoto began fraudulently invoicing Company 1 for drums that he and American Pride never delivered to the company. To conceal the fraudulent invoices, he would intermittently send the bogus invoices before and after sending legitimate ones. For example, in 2017, Robert DiNoto sent legitimate invoices #1555 through #1558 between February 15 and April 12 in the amounts of $19,223, $19,419, $18,038, and $20,908, respectively. He then submitted a fraudulent invoice, #1559, and received a payment from Company 1 for $19,448 for a shipment of 358 “NEW 55 GALLON STEEL DRUMS” that were never delivered.
Between December 2016 and August 2019, Robert DiNoto used American Pride’s invoices to bill and receive a total of approximately $257,181 from Company 1 for nonexistent drum deliveries. Robert DiNoto used the proceeds from the fraudulent billings for personal expenses, including to pay his credit card bills.
To avoid scrutiny throughout the conspiracy, the DiNotos kept their familial relationship with American Pride a secret from Company 1 employees. Despite their best efforts, third-party vendors used by American Pride would sometimes inadvertently forward an email or invoice intended for Robert DiNoto to Company 1. E. DiNoto would criticize Robert DiNoto for the mistake and ask him to remind his third-party vendors never to send correspondence to Company 1’s address. On at least one occasion, Robert DiNoto used an alias to conceal his identity when communicating with Company 1 employees.
Eugene Andrew DiNoto, age 51, of Bel Air, Maryland, previously pleaded guilty to conspiracy to commit wire fraud, engaging in an illegal monetary transaction, and filing a false tax return, in connection with schemes that defrauded his employer of more than $29 million. He is awaiting sentencing.
United States Attorney Erek L. Barron commended the FBI and IRS-CI for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorneys Martin J. Clarke and Harry M. Gruber, who are prosecuting the case.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to report fraud, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/report-fraud.
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