Former Public Utility Employee Pleads Guilty In Theft Of More Than $4 Million From Public Utility And Customers
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN FARCHIONE, a former Manager at a public utility company (the “Public Utility”), pled guilty today in Manhattan federal court to four felony counts in connection with a scheme to steal more than $4 million from the Public Utility and its customers between 2005 and 2016. During that time period, FARCHIONE obtained and kept millions of dollars in customer payments intended for the Public Utility and then manipulated the Public Utility’s computer and accounting systems to conceal the theft. FARCHIONE pled guilty before U.S. District Judge J. Paul Oetken to one count of honest services fraud, one count of mail fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft.
U.S. Attorney Geoffrey S. Berman said: “As he has now admitted, for more than a decade, John Farchione abused his position to steal millions of dollars from his employer, a public utility company New Yorkers rely upon. We will continue to work aggressively to protect New York’s public utilities and their customers from such brazen criminal conduct.”
According to allegations contained in the Indictment and statements made in related court filings and proceedings:
From at least in or about 2005, up to and including in or about November 2016, FARCHIONE orchestrated fraudulent schemes that allowed him to steal millions of dollars from the Public Utility.
FARCHIONE, who was employed by the Public Utility as a manager in Customer Operations during the relevant time period, devised and implemented the scheme, using his knowledge of the Public Utility’s billing and payment processes. FARCHIONE carried out the scheme with a co-conspirator, Louis Bendel, who has previously pled guilty in connection with his role in the scheme. Bendel operated a business that aggregated payments from customers of the Public Utility for the purpose of passing such payments on to the Public Utility. FARCHIONE and Bendel effected the fraud in part through conspiring to submit fraudulent checks and payments to the Public Utility, in amounts owed by customers who provided cash to Bendel believing he would submit those payments to the Public Utility on their behalf.
In fact, however, FARCHIONE and Bendel kept the customer cash for themselves and submitted fraudulent checks to the Public Utility that purported to convey aggregated payments by multiple customers of the Public Utility. FARCHIONE, by virtue of his position as an employee of the Public Utility, was able to conceal the nature of the fraudulent checks, and thereby perpetuate the fraudulent scheme, through his knowledge of and access to the Public Utility’s account payment system.
Additionally, FARCHIONE and Bendel conspired to create false and fraudulent positive balances on certain customer accounts related to the scheme, and then caused the Public Utility to issue refunds that were not actually due, the proceeds of which were obtained and shared by FARCHIONE and Bendel.
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FARCHIONE, 65, pled guilty to one count each of honest services fraud, which carries a maximum sentence of 20 years in prison; mail fraud, which carries a maximum sentence of 20 years in prison; conspiracy to commit mail fraud, which carries a maximum sentence of 20 years in prison; and aggravated identity theft in connection with the fraudulent schemes, which carries a mandatory sentence of two years in prison, to be served consecutively to any other sentence imposed. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge. In addition, FARCHIONE will be subject to financial penalties including restitution and forfeiture in amounts to be determined at sentencing.
FARCHIONE is scheduled to be sentenced by Judge Oetken on November 16, 2018.
Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Alex Rossmiller and Sidhardha Kamaraju are in charge of the prosecution.