5 Florida Men Indicted For Defrauding Xerox Of $25 Million
CONTACT: Barbara Burns
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ROCHESTER, N.Y.- U.S. Attorney James P. Kennedy, Jr. announced today that the grand jury returned a 63-count superseding indictment against Robert Lee Fisher, David Haynes, Kyle Haynes, Jason Haynes and Bryan Day. The indictment charges the defendants with wire fraud, conspiracy to commit mail and wire fraud, and conspiracy to commit money laundering. The charges stemmed from a scheme to defraud Xerox Corporation of approximately $25 million. The charges each carry a maximum penalty of 20 years imprisonment and a $250,000 fine.
Assistant U.S. Attorney Richard A. Resnick, who is handling the case, stated that the defendants reside near Daytona Beach, Florida. Fisher’s company RBM Imaging was an authorized reseller of Xerox Corporation’s office equipment. The other defendants (the “Haynes Defendants”) own Haynes Brother Furniture in Daytona.
Xerox Corporation, which is located in, among other places, Webster, New York, sells and leases office equipment, including printers. Xerox sells or leases the office equipment directly to end-user customers or to authorized resellers, like Fisher, who then resell or lease the office equipment to end-user customers, like the Haynes Defendants. The office equipment requires toner and other products to operate. End-user customers order the toner for their printers from Xerox. Rather than pay Xerox up-front for the toner, the end-user customers pay Xerox based on the number of prints made with the toner. However, at all times, the toner belongs to Xerox until consumed by the end-user customers. At no time may the end-user customers sell the toner.
The indictment alleges that the Haynes Defendants set up a sham company, HDH Graphics to obtain approximately sixty-three Xerox printers from Fisher. Although HDH Graphics made few, if any, prints with the printers, the Haynes Defendants fraudulently represented to Xerox that HDH Graphics was making prints using much more toner than the industry average, which deceived Xerox into shipping approximately $25 million worth of toner to HDH Graphics. The Haynes Defendants then sold the fraudulently obtained toner for approximately $11 million to an individual in Miami, Florida. The Haynes Defendants and Fisher shared the profits from the fraudulent sale of the Xerox consumables.
The indictment further alleges that the defendants repeatedly misrepresented to Xerox that the Haynes Defendants were making millions of prints with the toner, even though most of the printers were never taken out of their boxes. The defendants also provided Xerox with false usage profiles from the printers and false print samples that made it appear that the Haynes Defendants were making millions of prints and using much more toner than the industry average for each print.
The indictment further alleges that the Haynes Defendants made financial transactions to avoid having to pay federal income taxes on the fraudulent proceeds they received for selling the toner. For example, the Haynes Defendants transferred fraudulent funds to themselves under the false pretense that they were entitled to monthly reimbursements for travel and freight expenses that they purportedly paid and incurred on behalf of HDH Graphics. The Haynes Defendants also paid one of Fisher’s sham companies to assist Fisher in avoiding paying federal income taxes on the fraudulent proceeds he received.
“The fraudulent scheme alleged to have been devised and used by the defendants essentially allowed them to sell property which did not belong to them,” stated United States Attorney James P. Kennedy, Jr. “While the program was designed to help Xerox customers by only having them pay for the materials they actually used, the defendants converted Xerox’s goodwill into their own windfall. Such dishonest business practices—the cost of which is often borne by the consumer—will not be tolerated.”
“These defendants allegedly engaged in a $25 million multi-year fraud scheme,” said Kevin Kelly, Special Agent in Charge of U.S. Immigration & Customs Enforcement, Homeland Security Investigations. “The reality is losses like these often get passed on to the consumer in the forms of higher prices, which is why we must hold the operators of these schemes accountable. HSI special agents dedicated to uncovering financial fraud will continue to aggressively investigate those who seek to blatantly disregard the law for their own financial gain.”
The indictment also seeks forfeiture of millions of dollars in funds and assets that the government has seized from the defendants.
The charges were the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigation, Buffalo Office, under the direction of Special Agent-in-Charge Kevin Kelly, and the Internal Revenue Service, Criminal Investigation Division, under the direction of James Robnett, Special Agent-in-Charge, New York Field Office .
The defendants will be in Rochester on April 4, 2018, at 2:00 p.m. for their initial appearances before Magistrate Judge Jonathan W. Feldman.