You are here

Justice News

Department of Justice
U.S. Attorney’s Office
Middle District of Florida

FOR IMMEDIATE RELEASE
Wednesday, February 27, 2019

VR Labs Principals Found Guilty Of Scheme To Defraud Lee County Of Millions In Grant Program Funds

Fort Myers, FL – A federal jury has found Kay F. Gow (68, Naples), Robert T. Gow (77, Naples), and John G. Williams, Jr. (67, Virginia Beach, VA) guilty of conspiracy to commit wire fraud and wire fraud. The Gows were also found guilty of conspiracy to commit money laundering and illegal monetary transactions. Each defendant faces a maximum penalty of 5 years in federal prison for the conspiracy to commit wire fraud count and up to 20 years’ imprisonment for each wire fraud count (Gows: 4 counts each, Williams: 2 counts). The Gows each also face up to 10 years in federal prison for conspiracy to commit money laundering and for each count (4) of illegal monetary transactions. And the defendants face the forfeiture of more than $5.1 million in proceeds traceable to the offenses. All three are scheduled to be sentenced on May 20, 2019.

According to the evidence presented at trial, the Gows owned and controlled multiple entities, including HerbalScience Group, LLC, and HerbalScience Singapore Pte, Ltd. In 2010, the Gows formed VR Laboratories, LLC, in order to apply for a $5 million grant from Lee County through the Financial Incentives for Recruiting Strategic Targets (“FIRST”) program. The FIRST program consisted of taxpayer funds set aside by the county to bring economic development projects to the Ft. Myers area. In seeking the FIRST grant, the Gows made numerous false and fraudulent representations to various individuals and government entities about their financial success and that of HerbalScience and VR Labs, including that VR Labs was poised to become a leading global formulator and manufacturer of botanical pharmaceuticals. Ultimately, Lee County awarded VR Labs $5 million in FIRST grant funds to build a manufacturing facility that the Gows had claimed would bring hundreds of high-paying jobs and economic growth to Lee County.  

Once VR Labs executed an agreement with Lee County, Williams, a long-time friend of the Gows, registered a fictitious name, “Williams Specialty Bottling Equipment,” with the Florida Secretary of State. The Gows then represented that Williams would provide the bottling line for the manufacturing facility, when he had no such experience or expertise. Williams used false and fraudulent invoices for work and services allegedly performed on the bottling line to make demands for payment and, once paid, kicked back a substantial portion of the funds to VR Labs and the Gows. The Gows then used Williams’s false and fraudulent invoices to justify requests to Lee County for the payment of the grant money. Once VR Labs received the grant funds, the Gows fraudulently transferred those funds to entities they owned and controlled, and ultimately to themselves, by disguising the transfers as licensing fees, salaries, expenses, and other items. They also tried to conceal the source of the kickbacks through the creation of fictitious entities and documents.         

Ultimately, Lee County disbursed approximately $4.7 million in FIRST grant funds to VR Labs, but the manufacturing facility was never completed or operational.

This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Rachelle DesVaux Bedke and Michael Leeman.

Topic(s): 
Financial Fraud
Component(s): 
Updated February 27, 2019