Owner Of New Jersey Aircraft Parts Brokerage Company Indicted For Laundering Scrapped Jet Engine Parts, Filing False Tax Returns
NEWARK, N.J. – A federal grand jury returned a 23-count indictment today against the owner of a Ridgefield, New Jersey, aircraft parts brokering company for his role in a 19-year conspiracy to launder scrapped jet engine parts and for avoiding taxes related to his aircraft parts business, U.S. Attorney Paul J. Fishman announced.
Gideon Vaisman, 75, of Edgewater, New Jersey, was charged with one count of conspiracy to commit mail and wire fraud, nine counts of mail fraud, four counts of wire fraud, one count of conspiracy to commit fraud involving aircraft parts and eight counts of filing false tax returns. Vaisman was previously arrested on May 13, 2013 and charged by complaint with one count of conspiracy to commit wire fraud.
According to the indictment:
Vaisman owned Integrated Technology Corp. from 1989 through 1998, and Tara Technology Corp. from 1998 onward. Both businesses were located in Ridgefield and bought and sold aircraft parts. From 1990 through 2009, Vaisman orchestrated a scheme to defraud Federal Aviation Administration (FAA) repair stations, aircraft parts brokers, aircraft parts end-users and others by using phony documents to resell jet engine parts obtained from scrap metal dealers.
Vaisman, on behalf of Integrated Technology, and later Tara Technology, directly and indirectly purchased vital jet engine parts called “blades” and “vanes” from scrap metal dealers. Afterwards, Vaisman instructed Tara Technology’s general manager, Carmine Coviello, 63, to use his Suffern, New York-based aircraft parts broker and seller company, Shelby Enterprises, to sand and file the parts in order to conceal that they had been scrapped and, on occasion, rejected for repair by an FAA repair station. FAA regulations mandate that only FAA-certified repair stations or certified airframe and power plant mechanics may perform such work on aircraft parts.
Vaisman, Coviello and others also conducted sham sales of the illegally altered blades and vanes to Integrated Technology and Tara Aviation Ltd., an aircraft parts broker and seller incorporated in Tortola, British Virgin Islands, and located in Guernsey, United Kingdom. Despite being listed under a different owner, Tara Aviation was in fact completely controlled and financed by Vaisman. The sole purpose of these sales, which occurred only on paper, was to generate fraudulent trace paperwork for the parts. Trace paperwork documents the history of an aircraft part and includes information such as the part’s manufacturer, the aircraft on which the part was used and how it was used. The paperwork is also employed in determining whether an aircraft or aircraft part has been subject to severe stress or heat as would occur during a major engine failure, accident or fire. Under Vaisman’s direction and without any knowledge of the history of the scrapped parts, Coviello prepared fraudulent trace paperwork certifying that the parts had not been subjected to excessive stress and heat or deemed unsuitable by an FAA repair station.
Vaisman, Coviello and another conspirator stored the blades and vanes in Tara Technology’s warehouse inventory, ultimately selling them to aircraft brokers, airlines and others on behalf of Tara Aviation using the fraudulent trace paperwork.
The indictment also alleges that although Tara Technology and Tara Aviation acted as a single entity and that Vaisman controlled all of Tara Aviation’s operations, provided financing and had complete authority over its inventory and cash flows, he failed to report $14,236,000 in net income from Tara Aviation on his personal tax returns and those of Tara Technology.
The mail and wire fraud conspiracy and substantive charges each carry a maximum term of 20 years in prison and $250,000 fine, or twice the loss caused by the offense. The conspiracy to commit fraud involving aircraft parts carries a maximum term of 15 years in prison and a $500,000 fine, or twice the gross gain or loss caused by the offense. The tax charges each carry a maximum term of three years in prison and a $250,000 fine or twice the loss caused by the offense.
Coviello previously pleaded guilty to an information charging him with conspiracy to commit wire fraud in relation to the scheme. His sentencing is scheduled for Sept.10, 2015.
U.S. Attorney Fishman credited special agents of the U.S. Department of Transportation, Office of Inspector General, under the direction of Special Agent in Charge Douglas Shoemaker, and IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s charges.
The case is being prosecuted by Deputy Chief Scott B. McBride of the U.S. Attorney’s Office’s Economic Crimes Unit in Newark.
The charge and allegations against Vaisman are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defense counsel: Gerald Krovatin, Esq., Newark