fraud case studies
company president found guilty of defrauding investors and u.s. government
A federal jury found a Colorado businessman guilty of mail fraud, wire fraud, false statements, and failure to file tax return charges. These charges were related to defrauding investors and the U.S. Government concerning his proposed alternative fuel additive. The businessman, of Parker, Colorado, is the founder, President, and a member of the Board of Directors for his commercial business.
Through this commercial business, the businessman was raising money for and purportedly developing an alternative fuel additive called “vapor phase combustion (VPC).” He solicited money from investors, making a variety of claims regarding the proven efficacy of VPC. As part of his scheme, the businessman prepared and sent periodic newsletters to past and potential investors in which he falsely represented the results of scientific testing regarding VPC, and falsely represented that major oil companies were interested in making substantial investments in VPC. Over 7 years, more than 43 people invested approximately $559,200 in his business, based on the fraudulent pretenses, representations, and promises made. Instead he used this money to pay for personal expenses and some business expenses.
Additionally the businessman successfully lobbied members of Congress and obtained a $3.6-million earmark grant for further testing of VPC. He created a non-profit entity to obtain and use the money, then submitted a grant proposal and other documents to EPA, which he knew contained material falsities, including the false scientific test results for VPC. As a result of the fraud, the non-profit entity actually received approximately $2 million of the earmarked grant money from EPA.
Subsequent to the businessman’s conviction, the non-profit entity’s treasurer pled guilty to three counts of knowingly failing to file tax returns for the commercial business. He was involved with the company, acting at various times as its registered agent, bookkeeper, chief of staff, corporate secretary, and treasurer. He was sentenced to 12 months probation and ordered to pay a $3,450 fine.
This case was conducted with the Internal Revenue Service Criminal Investigation Division and the U.S. Postal Inspection Service.
when good money goes bad • true stories of grant fraud at epa