Thursday, September 20, 2007
TWO MEN CHARGED IN MAIL FRAUD SCHEME
(HOUSTON, TEXAS) - Two men were charged with mail fraud, for embezzling $11.8 million dollars from a local marine transportation company, United States Attorney Don DeGabrielle Jr. announced today.
Vernon Franklin Beck and Donald Fred Cole Jr., were arrested on federal warrants Tuesday, Sept. 11, 2007. Beck was arrested at his place of work, and Cole at his home. The men had their initial appearances before U.S. Magistrate Judge Frances Stacy the same day. The prosecutor requested that the men be detained in custody due to the risk that they may flee the jurisdiction. Detention and probable cause hearings will take place on Friday, Sept. 14.
The Criminal Complaint alleges the two embezzled funds from Beck’s employer by using a fictitious company created by Cole, submitting phony invoices to the employer for work never done, which Beck alone approved for payment, then directing payment to be deposited into a bank account created by Cole. Beck deflected inquiries about the alleged contractor from supervisors and others with lies intended to divert attention away from the company. The defendants used the United States Postal Service to receive checks from the defrauded company. The total amount of the fraud is estimated to be $11.8 million dollars, over four years.
Beck and Cole are charged with mail fraud and aiding and abetting, in violation of Title 18, United States Code, Sections 1341 and 2. Those statutes allow for punishment of up to 30 years in prison and a fine of $250,000 or more.
The scheme met its demise when an unrelated audit showed duplicate billing for the same work, by two different companies. Upon further inspection, it was determined the company used by Beck and Cole did not exist, had never done any work for the employing company and the funds advanced to that company were the result of fraud.
The United States seized assets including $775,000 from a bank account and a yacht purchased three months ago valued at $877,000, which was free and clear.
The case is being investigated by special agents of the FBI and the U.S. Postal Inspection Service. Assistant United States Attorney Cynthia DeGabrielle is prosecuting the case