Romanian Citizens Arrested and Charged with Laundering $1.4 Million in Proceeds from Jewelry Thefts and Covid Fraud
SAN DIEGO – Matthew P. Hernandez, former manager of a small, San Diego-based technology support firm, was sentenced in federal court today to 24 months in custody for embezzling more than $350,000. Hernandez was also ordered to pay $356,664.46 in restitution to the firm.
Hernandez pleaded guilty on August 24, 2021, to four felony counts of wire fraud. According to the plea agreement and the government’s sentencing memorandum, Hernandez was responsible for managing payroll, accounts payable, and disbursing bonuses to employees at the firm. Hernandez had unfettered access to the firm’s books and records and authority to sign checks on the firm’s behalf. In his managerial role, Hernandez stole from the firm hundreds of times over the course of seven years, from 2010 to January 2017.
Hernandez stole from the firm in four different ways. First, Hernandez issued checks and made online payments from the firm’s business checking account directly to his USAA account to pay off personal credit card debt. Second, Hernandez used the corporate credit card to make unauthorized, non-business-related purchases. For example, Hernandez used the corporate credit card to buy a $3,500 hot tub, a home gym, a knife set, a TAG Heuer racing watch, roundtrip flights between Los Angeles and the Dominican Republic, and concert tickets to Coachella. Third, Hernandez issued multiple paychecks to himself for a single pay period. And fourth, Hernandez issued checks from the firm’s business checking account directly into his personal bank account.
To conceal his fraudulent conduct, Hernandez falsified the firm’s books to make the fraudulent payments look legitimate. To do this, Hernandez changed the payee entries on the firm’s books from his personal accounts to companies with which the firm did business. When confronted about discrepancies on the firm’s books or questions about the USAA account, Hernandez lied to make it appear that he would balance the books and reimburse the firm for any unauthorized funds paid to him, and that the USAA account belonged to a company with which the firm did business.
The fraudulent conduct was first discovered in January 2017 when Hernandez overdrew $10,000 from the firm’s business checking account. Upon inquiry, it was confirmed that the USAA account did not belong to a company with which the firm did business but rather it belonged to Hernandez. The firm extensively reviewed its books and records, identified Hernandez’s fraudulent purchases and transactions, and provided that information to federal law enforcement. The firm’s efforts to identify Hernandez’s fraudulent conduct took years to complete and was instrumental in moving the investigation and prosecution forward.
“This defendant stole resources that he was hired to protect,” said U.S. Attorney Randy Grossman. “These thefts are devastating for small businesses. This is a significant sentence that hopefully alerts other would-be thieves that stealing from your employer carries significant consequences.” Grossman thanked the prosecution team, the FBI and U.S. Postal Service investigators for their work on this case.
“For years, Mr. Hernandez engaged in a scheme to defraud his employer - treating their business accounts as his own by writing checks and wiring money to himself, misusing his work credit card, and issuing duplicate paychecks,” said FBI Special Agent in Charge Stacey Moy. “The FBI is proud to work with our partners at the U.S. Postal Service to identify and hold accountable those who abuse their work placement and access for personal gain. I hope today’s sentence provides some closure for the victims.”
“The U.S. Postal Inspection Service plays a vital role in these types of fraud schemes that involve the embezzlement of funds. Every day, U.S. Postal Inspectors protect our postal customers, businesses, and the public from such fraud scams that involve the U.S. mail,” said Carroll N. Harris III, Postal Inspector in Charge of the Los Angeles Division.
DEFENDANTS Case Number 20-cr-3665-JLS
Matthew P. Hernandez Age: 46 Riverside, California
SUMMARY OF CHARGES
Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: Twenty years in prison and a fine twice the $356,644.46 pecuniary loss resulting from the offense
Federal Bureau of Investigation
United States Postal Service
Assistant U. S. Attorney Patrick C. Swan (619) 546-8450