Two People Charged In A Scheme To Defraud Their Former Employers Of Millions Of Dollars
NEWARK, N.J. – Two Bergen County, New Jersey, residents were charged today in a scheme to defraud two international companies out $3 million by fraudulently billing them for services that were never completed, U.S. Attorney Paul J. Fishman announced.
Barbara Brown, 64, and Philip Charles de Gruchy, 61, both of Park Ridge, New Jersey, surrendered to federal agents this morning and were charged by complaint with one count of conspiracy to commit mail fraud. The defendants made their initial appearances this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court. Each was released on $250,000 unsecured bond.
According to the complaint filed in this case:
From August 2007 through April 2, 2010, 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. As part of her position, she had authority to hire and pay contractors. Brown caused Company A to enter into a business relationship with CEM, a company that Brown and de Gruchy secretly controlled. From Nov. 5, 2007, through March 4, 2010, CEM submitted more than 60 invoices to Company A for alleged marketing consulting work. The purported work was either copied from other vendors’ work, was related to other businesses or did not correspond to items on CEM’s invoices.
The net amount that CEM billed and collected from Company A was $2.855 million. Although each of the checks that Company A issued to CEM was mailed to various Canadian addresses, the checks were ultimately deposited at bank branches located in White Plains, New York. Checks were written out of the CEM account payable directly to either de Gruchy or Brown or to Silk Farm and Ontario LLC, companies affiliated with de Gruchy. Monies obtained from the scheme were used for personal purposes, including home renovations and mortgage payments on the Park Ridge residence that Brown and de Gruchy shared, and credit card bills.
From July 2010 through Nov. 11, 2011, de Gruchy was employed as the director of global relations management for “Company B,” an international manufacturer and retailer of luxury travel suitcases and accessories, headquartered in South Plainfield, New Jersey. As part of his job, de Gruchy 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 on the migration project. At no time did de Gruchy reveal his personal or business relationship with Brown.
From Nov. 4, 2010, through Sept. 22, 2011, Company B mailed $216,835 in checks to a Canadian address purporting to belong to Brown or BI Insights, an alleged Canadian company engaged in marketing consulting services and controlled by Brown. De Gruchy approved all of the invoices submitted by Brown and BI Insights. An examination of documents that purported to support the invoices to Company B revealed that no meaningful work product was furnished. Additional invoices submitted by Brown to Company B, totaling $124,150, were not paid after the scheme to defraud was uncovered.
The counts of conspiracy to commit mail fraud with which the defendants are charged carry a maximum penalty of 20 years in prison.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Leslie Faye Schwartz of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charges and allegations contained in the complaint are merely accusations and the defendants are considered innocent unless and until proven guilty.