Bergen County Man Admits Defrauding Two International Companies Of $3 Million And Failing To Pay Over $880,000 In Taxes
NEWARK, N.J. – A Park Ridge, New Jersey, man today admitted using shell companies and phony invoices to scam both his and his wife’s employers out of millions of dollars, U.S. Attorney Craig Carpenito announced.
Philip Charles de Gruchy, 64, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to Count One and Counts 10 through 15 of a superseding indictment charging him with conspiracy to commit mail fraud and subscribing to false individual and corporate tax returns.
According to documents filed in this case and statements made in court:
From August 2007 through April 2, 2010, de Gruchy’s then-wife Barbara Brown was employed by “Company A,” a toy and juvenile products retailer headquartered in Wayne, New Jersey, first as director of customer relationship management and then as director of global customer relations management. She had authority to hire and pay contractors. Brown caused Company A to enter into a business relationship with CEM Inc., an entity that she and de Gruchy secretly controlled. From Nov. 5, 2007, through March 4, 2010, CEM submitted approximately 170 invoices to Company A totalling more than $3 million for alleged marketing consulting work that was ultimately unnecessary, worthless, or never completed.
Although the checks that Company A issued to CEM were mailed to various Canadian addresses, the checks were ultimately deposited by de Gruchy into a CEM account at bank branches located in Park Ridge. De Gruchy wrote checks out of the CEM account payable directly to either de Gruchy, Brown or two companies affiliated with de Gruchy: Silk Farm Inc. and Ontario LLC. De Gruchy and Brown then used the money for personal purposes, including home renovations, mortgage payments on the Park Ridge residence that Brown and de Gruchy shared, and credit card expenses.
From July 2010 through Nov. 11, 2011, de Gruchy was employed as the director of global relations management by “Company B,” an international manufacturer and retailer of luxury suitcases and accessories, headquartered in South Plainfield, New Jersey. He was responsible for a data migration project designed to assist Company B with identifying customer purchasing patterns. De Gruchy obtained verbal approval from Company B to hire Brown to assist him on the migration project. At no time did de Gruchy reveal his personal and financial relationship with Brown.
From November 2010 until November 2011, Brown submitted invoices in her own name or the name of her company, BI Insights, totaling more than $300,000 for purported work related to the data migration project. De Gruchy approved all of the invoices submitted by Brown and BI Insights. The work was ultimately unnecessary, worthless, or never completed. Checks from Company B totaling $216,825 were sent to one of the Canadian addresses used to receive checks from Company A and deposited into a Canadian bank account. Certain funds from the Canadian bank account were thereafter transferred to de Gruchy and Brown’s joint personal bank accounts in the United States.
De Gruchy also admitted that he filed false federal tax returns, Forms 1040, for the calendar years 2009 and 2010, in which he knowingly overstated expenses and understated gross receipts, including receipts from the fraudulent conduct involving Company A and Company B. De Gruchy further admitted that he filed false federal corporate income tax returns, Forms 1120, for the calendar years 2009 and 2010 for CEM Inc. and Silk Farm Inc., in which he falsely claimed certain payments as business expenses. De Gruchy acknowledged at the plea hearing that he owes the IRS approximately $882,844 in additional taxes for 2009 and 2010.
Brown, who was charged with de Gruchy in the superseding indictment, passed away in May 2017. As such, the charges against her were dismissed in June 2017.
The mail fraud conspiracy charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The false tax return counts each carry a maximum potential penalty of three years in prison and a $250,000 fine, or twice gross gain or loss from the offense. Sentencing is scheduled for July 9, 2018.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Bradley W. Cohen in Newark, and IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, with the investigation.
The government is represented by Senior Litigation Counsel Leslie F. Schwartz of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
Defense counsel: Wanda Akin Esq., Newark