Federal Grand Jury Indicts Oregon and Pennsylvania Men for Allegedly Defrauding New Mexico-Based Company
Defendants Charged with Defrauding Kinesio USA LLC of Approximately $4.3 Million
|U.S. Attorney’s Office July 15, 2013|
ALBUQUERQUE—A federal grand jury sitting in Albuquerque, New Mexico, has returned a 38-count indictment charging Johannes Jarvis, 40, of Portland, Oregon, and John Hope, 65, of Huntingdon Valley, Pennsylvania, with conspiracy, wire fraud, and money laundering charges, announced U.S. Attorney Kenneth J. Gonzales; Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI; and Dawn Mertz, Special Agent in Charge of the Phoenix Field Office of IRS-Criminal Investigation.
The indictment charges Jarvis and Hope with a wire fraud conspiracy count, 21 counts of wire fraud, and 16 counts of money laundering. The indictment alleges that from late 2007 through April 2010, Jarvis and Hope conspired to defraud Kinesio USA LLC, a New Mexico Company that sells therapeutic elastic tape and related products, and its related company, Kinesio Holding Corporation (together, “Kinesio”), of approximately $4.3 million, at least $1.2 million of which Jarvis and Hope retained as profits.
At all times relevant to the indictment, Jarvis was the director of Marketing for Kinesio, and Hope owned a printing business that operated in China that had been hired to produce marketing materials for Kinesio. According to the indictment, in late 2007 or early 2008, Kinesio directed Jarvis to locate a new manufacturer for its therapeutic elastic tape and Jarvis allegedly suggested searching for a manufacturer in China. Thereafter, Jarvis allegedly reported that he had located a suitable manufacturer in China but that Kinesio would have to work through a broker to coordinate the business relationship. In April 2008, Jarvis and Hope allegedly incorporated Grace International (HK) Limited (“Grace International”) in Hong Kong, of which they were the sole owners. Thereafter, Jarvis allegedly represented to Kinesio that Grace International would broker the relationship between Kinesio and the tape manufacturer while concealing Jarvis’s and Hope’s ownership of and involvement in the company.
The indictment alleges that relying on Jarvis’ misrepresentations, Kinesio entered into a contract with Grace International pursuant to which Kinesio paid Grace International more than $4.3 million for therapeutic elastic tape between July 2008 and January 2010. It further alleges that Jarvis and Hope defrauded Kinesio by having Grace International charge Kinesio a significant undisclosed markup above the manufacturer’s price for the tape and that Jarvis and Hope shared the profits generated by the markup.
The indictment alleges that Jarvis and Hope facilitated 16 wire transfers of money, ranging from $23,490 to $657,120, from Kinesio to Grace International between July 2008 and January 2010, in addition to other wire communications that were transited to perpetuate their unlawful scheme to defraud Kinesio. It also charges Jarvis and Hope with laundering the proceeds of their unlawful scheme by depositing the money into various bank accounts. The indictment also seeks forfeiture of assets which constitute or are derived from the unlawful scheme, including residences in Portland, Oregon, and Huntingdon Valley, Pennsylvania, and a money judgment against Jarvis and Hope in the amount of $1,270,075.99.
If convicted, Jarvis and Hope each face a maximum possible penalty of 20 years in prison and a $250,000 fine on the wire fraud conspiracy and each of the 16 wire fraud charges. Each also faces a maximum possible penalty of 10 years in prison and a fine of either $250,000 or twice the amount involved for each of the 16 money laundering charges.
Jarvis and Hope will be summoned to appear in federal court in Albuquerque to be arraigned on the indictment on Augusut 8, 2013. Charges in indictments are merely accusations. Defendants are presumed innocent unless found guilty beyond a reasonable doubt in a court of law.
This case was investigated by the Albuquerque Field Office of the FBI and IRS-Criminal Investigation in Albuquerque and is being prosecuted by Assistant U.S. Attorney C. Paige Messec.