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Press Release

Sykesville Business Owner Pleads Guilty to $11 Million Fraud Scheme

For Immediate Release
U.S. Attorney's Office, District of Maryland

Baltimore, Maryland – Rolf Ramelmeier, age 78, of Sykesville, Maryland pleaded guilty today to mail fraud and money laundering in connection with a scheme to defraud Northrop Grumman Corporation of more than $11 million.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Acting Special Agent in Charge Scott Hinckley of the Federal Bureau of Investigation.

According to Ramelmeier’s plea agreement, he owned and operated JADM. Inc., which was in the business of selling or brokering natural gas sales, out of his residence.  Ramelmeier exercised complete control and authority over the company.  JADM’s sole client for many years was the Northrop Grumman Corporation.  JADM supplied natural gas to several Northrop Grumman Corporation facilities that were located in Linthicum, Maryland. Ramelmeier obtained the gas from a supplier, such as UGI Energy Services (UGI) or Potomac Electric Power Company (PEPCO) and Baltimore Gas and Electric Company (BG&E) transported the gas from UGI or PEPCO to the Northrop Grumman facilities.  JADM would then issue monthly invoices to Northrop Grumman which specified the units, known as “decatherms,” of gas delivered and the cost per decatherm.  In turn, Northrop Grumman would issue payment to JADM on the invoices.

Ramelmeier admitted that beginning in at least 2003 and continuing until December 2013, he engaged in a scheme to defraud Northrop Grumman by overcharging for the amount of natural gas delivered to the Linthicum facilities.  Ramelmeier executed and concealed this scheme by, among other things, falsifying invoices and other documents and by using a false corporate identity and bank accounts that he maintained in the names of shell entities.

Specifically, Ramelmeier represented himself as a gas broker and led the UGI or PEPCO personnel to believe that their company was entering into a sales contract directly with Northrop Grumman when, in fact, Northrop Grumman had no knowledge of these agreements.  Under the agreements, UGI and PEPCO were required to submit their invoices to Northrop Grumman by mailing them to a post office box in Roanoke Rapids, North Carolina and by e-mailing a copy of each invoice to Ramelmeier at JADM. In fact, Northrop Grumman had no such post office box.  Rather, at Ramelmeier’s direction, an associate opened that post office box using the name “Northrup Sensors.”  The associate regularly retrieved the mail from the post office box, including the invoices from PEPCO and UGI, and forwarded that mail to Ramelmeier. Ramelmeier created invoices on JADM letterhead which charged the real Northrop Grumman for more than the amount of natural gas that UGI or PEPCO had invoiced.  Northrop Grumman then paid JADM on the inflated JADM invoices, first by check and then, in more recent years, by wire transfer to JADM’s bank account.

Ramelmeier transferred those Northrop Grumman payments from the JADM account into a bank account that he held in the name of Consolidated Fuel Atlantic (Consolidated), a shell company with no assets or business. Ramelmeier then transferred all or most of the funds out of the Consolidated bank account and into an account Ramelmeier had opened in the name of Northrop Group Sensor Division (NGS Div.) with an address at the post office box in Roanoke Rapids. Ramelmeier used NGS Div. checks to pay UGI or PEPCO for the amount of their original invoices, deceiving those companies into believing that they were being paid by Northrop Grumman.  Ramelmeier kept the difference between the original amount invoiced by UGI and PEPCO and the amount that Northrop Grumman paid based on JADM’s inflated invoice, for his own personal use and benefit.

As a result of the fraudulent scheme Ramelmeier caused Northrop Grumman to pay him at least $11,238,519 for natural gas that was never actually provided. 

In December 2013, Northrop Grumman noticed some unusual charges by JADM for natural gas purportedly used at one of the Linthicum locations, which Ramelmeier falsely claimed was a JADM billing error. Ramelmeier offered to credit Northrop Grumman for the overcharge.  Suspicious of Ramelmeier’s explanation, Northrop Grumman hired a consulting firm to conduct an analysis to determine if there had been any other overcharges. The consulting firm compared the amount of gas delivered, per JADM’s invoices, to the amount of gas delivered, per BG&E’s records.  That analysis revealed that JADM routinely charged Northrop Grumman and specifically, that between 2003 and 2013 JADM overcharged Northrop Grumman by $11,238,519.

On May 16, 2014, Northrop Grumman representatives confronted Ramelmeier about the $11 million in overcharges.  Ramelmeier falsely claimed, among other things that the billing errors occurred because corrupt employees doing the billing for JADM had engaged in embezzlement, when in fact, JADM had no employees; and that he could not provide Northrop Grumman with his billing records because his company computer files were corrupted.

On May 19, 2014, the first business day following his confrontation with the Northrop Grumman representatives, Ramelemeier used $82,626.54 of the fraud proceeds to pay off the entire mortgage balance on his residence, and the next day the post office box in Roanoke Rapids was closed.

Ramelmeier faces a maximum sentence of 20 years in prison each for mail fraud and for money laundering.  U.S. District Judge J. Frederick Motz has scheduled sentencing for November 2, 2015 at 10:00 a.m.

United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorney Kathleen O. Gavin, who is prosecuting the case.

Updated August 18, 2015