David Saks: April 2014

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Former CIO of Construction Supply Company Nets 37 Months in Prison

Former Chief Investment Officer of Construction Supply Company Sentenced to 37 Months in Prison in Bank Fraud Scheme

U.S. Attorney’s Office April 24, 2014
  • Eastern District of New York (718) 254-7000

BROOKLYN, NY—Rodney Watts, 42, the former chief investment officer of GDC Acquisitions LLC (GDC), was sentenced today in federal court in Brooklyn, New York, to 37 months in prison, to be followed by five years of supervised release. As part of the sentence, Watts was ordered to pay more than $15 million in restitution and $18 million in forfeiture. In May 2013, the defendant was convicted, following three weeks of trial, by a federal jury on charges of bank, mail, and wire fraud; conspiracy to commit bank, mail and wire fraud; and false statements. Watts also served as the chief financial officer of GDC at one time. These charges arose out of the defendant’s scheme to defraud Amalgamated Bank, GDC’s asset-based lender, of $21 million in fraudulent loans. Watt’s co-defendant, Courtney Dupree, the former chief executive officer of GDC, was convicted by a federal jury in December 2011 of similar charges. In June 2013, Dupree was sentenced to 84 months’ imprisonment, to be followed by five years’ supervised release. As part of the sentence, Dupree was ordered to pay more than $15 million in restitution and $18 million in forfeiture.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Philip Bartlett, Inspector in Charge, United State Postal Inspection Service (USPIS), New York Division.

“Instead of building their company through hard work and drive, Watts and his cohorts created the illusion of success for GDC based on lies and deceit. Watts then spent years propping up that illusion and using it to defraud a bank out of millions of dollars,” stated United States Attorney Lynch. “Executives who play fast and loose with corporate financial information should expect to be investigated and prosecuted to the full extent of the law.” Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation and the Postal Inspection Service, the agencies responsible for leading the government’s criminal investigation.

GDC, based in Long Island City, Queens, is a holding company that owns various subsidiaries, including JDC Lighting, a lighting distributor; Unalite Electric and Lighting, an lighting maintenance company; and Hudson Bay Environments Group, a furniture distributor. The defendant helped orchestrate a scheme to defraud Amalgamated Bank and C3 Capital, a mezzanine lender based in Kansas City, Missouri, by obtaining and attempting to obtain loans on the basis of false financial statements and other material misrepresentations. He and others gave Amalgamated Bank false financial information for GDC in which they had fraudulently inflated the company’s accounts receivable in order to obtain initially, and then maintain, credit lines totaling approximately $21 million. The defendant and his co-conspirators inflated the accounts receivable by a variety of means, including by recording in the corporate books sales that had never taken place. For example, the defendant represented to Amalgamated Bank in writing in November 2009 that GDC had $25.2 million in accounts receivable when, in fact, it had only approximately $9 million. In addition, the defendant and others defrauded Amalgamated Bank by causing GDC to acquire a company covertly, contrary to the terms of their loan agreement, and by concealing the acquisition from the bank. The scheme unraveled when one of the accountants turned himself into the FBI and cooperated in the government’s investigation in an undercover capacity for approximately two months.

This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state; and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.

The government’s case is being prosecuted by Assistant United States Attorneys Catherine M. Mirabile and Brian Morris.

Defendant:
Rodney Watts
Age 42
Bronxville, New York

http://www.fbi.gov/newyork/press-releases/2014/former-chief-investment-officer-of-construction-supply-company-sentenced-to-37-months-in-prison-in-bank-fraud-scheme?utm_campaign=email-Immediate&utm_medium=email&utm_source=fbi-in-the-news&utm_content=316951




David Saks



Time&Temp Memphis

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