Florida Resident Sentenced To Ten Years In Prison For Leading A Conspiracy To Defraud Factoring Companies
Defendant Masterminded Scheme to Defraud Multiple Financing Companies Resulting In The Victims’ Loss of More Than $9,500,000
OAKLAND – Karl James Stehlin, aka Carl Davis, was sentenced to ten years in prison and ordered to pay $2,158,250.04 in restitution for leading a scheme to defraud multiple companies out of more than $9,500,000, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down yesterday by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge.
Stehlin, 63, of Seminole, Fla., pleaded guilty to the charges on January 25, 2018. In pleading guilty, Stehlin admitted that along with co-defendant Gregory Scott Winters, aka Rob Sacci, 46, formerly of Ocala Fla., and others, he conspired to sell millions of dollars’ worth of fake invoices to a Walnut Creek company. The Walnut Creek company provides services related to accounts receivable collateralized lending, also called “factoring.” Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount. The factor advances a percentage of the face amount of the invoices to the business and then collects the full amount from the customers of the business in due course. Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business. As part of the scheme, Stehlin and his co-conspirators created fake invoices and sold them to the Walnut Creek company.
To commit this fraud scheme, Stehlin and his co-conspirators created multiple shell entities. For example, the co-conspirators created Nature’s Own Pharmacy, a company they claimed sold equine supplements. They also created other shell companies the co-conspirators represented to be Nature’s Own Pharmacy’s customers. In reality, Nature’s Own Pharmacy is a phony shell corporation that sold no goods. Further, all of Nature’s Own Pharmacy’s purported customers were phony companies that purchased no goods and owed no legitimate debt. Stehlin admitted that he and his co-conspirators then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the shell company’s fake customers, and then sold the phony invoices to victims.
Stehlin admitted he perpetrated this scheme over a six-year period on multiple factoring companies throughout the United States. Stehlin used false names, virtual office addresses, and other false information to execute the scheme.
A federal grand jury indicted Stehlin on January 12, 2017, charging him and Winters with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 and wire fraud, in violation of 18 U.S.C. § 1343. Stehlin pleaded guilty to both counts.
During the proceedings at which Stehlin pleaded guilty and was sentenced, Judge Gonzalez Rogers made findings that the defendant organized the scheme and that he defrauded multiple factoring companies out of more than $9,500,000. Further, Judge Gonzalez Rogers found that Stehlin and his co-conspirators duped their victims into believing they would collect the face value of the invoices from the purported customers when, in reality, the invoices sold by Stehlin to the factoring companies were worthless. Stehlin admitted that the factoring companies involved in this case suffered losses in excess of $9,500,000. Judge Gonzalez Rogers concluded the defendant’s conduct resulted in significant financial hardship to one or more of his victims, including one factoring company that had to close a branch and lay off employees, many of whom worked for that company for years.
In addition to the prison term, Judge Gonzalez Rogers sentenced the defendant to a three-year period of supervised release. The defendant has been in federal custody since his initial appearance and will begin serving his sentence immediately.
Winters pleaded guilty to conspiracy and wire fraud charges on October 12, 2017. On April 19, 2018, Judge Gonzalez Rogers sentenced Winters to two years in prison to be followed by three years of supervised release for his role in the scheme.
Assistant U.S. Attorney William J. Gullotta is prosecuting the case with the assistance of Katie Turner and Michelle Alter Eck. The prosecution is the result of an investigation by the Federal Bureau of Investigation.