Southport exec gets jail term in $18.6M fraud scheme
Published 12:12 pm, Thursday, September 10, 2015
A federal judge in Manhattan sentenced a Southport man to 21 months in prison and ordered him to forfeit $950,000, after he pleaded guilty in May to defrauding investors and lenders of millions of dollars through his New Jersey-based company G3K Displays.
Jonathan Wheeler, 46, was co-owner and chief financial officer of G3K along with Steven Kaitz, a Jersey City, N.J., resident who was CEO and who received a 40-month prison sentence from U.S. District Judge Jed Rakoff. Also receiving prison terms were G3K co-owner Latchmee Mahato of New York City, who received a 24-month sentence, and Zachary Kaitz of New York City, who got five months.
G3K sold displays used by retailers. Between 2012 and May 2014, the company secured $18.6 million from lenders including Veritas Financial Partners and MVC Capital by misleading them on the company’s sales and financial condition. The sham extended to creating fake email accounts for fictitious employees of customers like Adidas and Foot Locker, which Wheeler and his G3K partners employed to “verify” false information about G3K’s condition.
Wheeler and his two partners misappropriated $2.8 million of the loan proceeds for their personal use or for kickbacks. The four must repay $18.6 million in restitution to lenders that include Boca Raton, Fla.-based Veritas Financial Partners and MVC Capital of Purchase, N.Y.
“This case highlights the lengths people will go to steal money and cover their tracks,” said Preet Bharara, U.S. attorney for the Southern District of New York, in a written statement. “These defendants covered much of the fraud playbook, from creating phony purchase orders and invoices to using fake email customer accounts to inflate company revenues, and then used the ill-gotten gains to pay for homes, luxury cars, and private school tuition.”