Former Partner in Global Consulting Firm Sentenced to Two Years in Federal Prison for Billing $586,000 in Bogus Consulting Work and Travel Expenses
CHICAGO — A former Chicago-based partner in a global consulting firm has been sentenced to two years in federal prison for scheming with a client to bilk their companies out of hundreds of thousands of dollars in purported consulting work that was never performed.
NAVDEEP ARORA, a former partner in the Chicago office of McKinsey & Company Inc., plotted with a former internal consultant at State Farm Mutual Automobile Insurance Co. to defraud both companies out of phony consulting fees. Arora also fraudulently obtained money from McKinsey, State Farm and other McKinsey clients in the form of purported work-related travel reimbursements for expenses that were actually incurred on Arora’s personal trips. Arora falsely expensed personal trips to Scottsdale, Ariz.; Vail, Colo.; Las Vegas, Nev.; London, England; Prague, Czech Republic; Munich, Germany; and elsewhere. He took the State Farm employee, MATTHEW SORENSEN, on two personal vacations – to Napa, Calif. and New York, N.Y. – and expensed them to State Farm as business expenses. The costs included flights, hotels, meals, car services and other items.
Arora, 53, of London, England, and formerly of Chicago, was arrested in 2016 at JFK International Airport in New York after arriving on an overseas flight. He pleaded guilty last year to one count of wire fraud. U.S. District Judge Ronald A. Guzman imposed the sentence Wednesday in federal court in Chicago.
The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
Arora and Sorensen “concocted a fraudulent scheme to benefit themselves during their employment,” Assistant U.S. Attorney Sunil R. Harjani argued in the government’s sentencing memorandum. “The defendants’ actions have caused both companies to undertake time and expense uncovering this fraud, destroyed a longstanding relationship between these two companies, and caused reputational harm.”
Sorensen, of Bloomington, Ill., also pleaded guilty to a wire fraud charge. Judge Guzman in September 2017 sentenced Sorensen to one year and one day in prison.
Arora and Sorensen had a longstanding business relationship through Arora’s work overseeing the consulting services McKinsey provided to State Farm. At State Farm, Sorensen provided input and recommendations about whether to hire outside consultants for company projects and who to retain.
According to the charges, their fraud scheme began in 2007. Arora and Sorensen used two corporate entities – “Gabriel Solutions” and “Andy’s BCB” – to defraud their employers out of the phony fees. Sorensen billed McKinsey for the bogus work purportedly performed by the companies, while Arora allocated the fees to the State Farm projects to which he was assigned. As a result, McKinsey and State Farm paid $38,265 for consulting services purportedly performed by “Andy’s BCB,” and $452,710 in fees billed by “Gabriel Solutions.”
Sorensen pocketed a large majority of the money, while Arora received a substantial salary and benefits from McKinsey for maintaining its business relationship with State Farm.