Perpetrators of Scheme to Defraud Staffing Companies Found Guilty of Conspiracy to Commit Fraud as Well as Mail Fraud and Wire Fraud
|U.S. Attorney’s Office October 20, 2011|
DENVER—Six defendants were found guilty this afternoon of conspiracy to commit fraud as well as mail fraud and wire fraud, U.S. Attorney John Walsh, FBI Special Agent in Charge in Denver James Yacone, and IRS-Criminal Investigation Special Agent in Charge Sean Sowards announced. The defendants were found guilty following an approximately three-week trial before U.S. District Judge Christine M. Arguello. The jury deliberated for two-and-a-half days before reaching their guilty verdicts. All six defendants represented themselves. Following the reading of the guilty verdicts, the defendants were taken into custody, pending detention hearings scheduled for later this afternoon. Judge Arguello will sentence the defendants on February 17, 2012.
On June 9, 2009, the government obtained a 25-count indictment charging six individuals—David A. Banks, Demetrius K. Harper, Gary L. Walker, Clinton A. Stewart, David A. Zirpolo, and Kendrick Barnes—with various counts of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and an allegation of asset forfeiture. Each defendant was found guilty of each charge, except one defendant was found not guilty of one of the counts.
According to the indictment and facts presented during the trial, Banks and his co-defendants were in the process of developing a software program they claimed would be beneficial to law enforcement agencies. The defendants, acting through companies known as Leading Team, Inc. (LT), IRP Solutions Corporation (IRP), or DKH, LLC (DKH), perpetrated a scheme to defraud victim staffing companies by making false statements to induce 42 staffing companies to payroll employees for them even though they did not any source of income to pay the staffing companies. In many cases, one or more of the defendants themselves reported time to and were paid by a staffing company, while one or more of the other defendants approved the reported time. That staffing company would pay the defendants, but LT/IRP/DKH never paid the invoices from the staffing company. The scheme also included approving and submitting to staffing companies time reporting cards containing false statements about the number of hours worked by employees, the times of day during which employees worked, and/or the nature of the work performed by employees. In total, the defendants defrauded the staffing companies of over $5.1 million.
“Today’s outcome vindicates the agents and attorneys who have worked tirelessly to ensure that those who were responsible for this multi-million dollar fraud are held accountable,” said U.S. Attorney John Walsh.
“Today’s verdicts are a significant step toward bringing these six individuals to justice after they defrauded dozens of companies and individuals out of millions of dollars,” said FBI Denver Special Agent in Charge James Yacone. “On behalf of the FBI, I would like to thank the jury for its service, and the U.S. Attorney’s Office and IRS-Criminal Investigation for their unwavering commitment to this investigation and prosecution. Working together, we will continue to pursue those who misrepresent themselves or their intentions to swindle others out of their hard earned money.”
The defendants convicted of conspiracy to commit mail and wire fraud face not more than 20 years in federal prison, and a fine of not more than $250,000 or twice the gain or loss from the offense. The defendants convicted of mail fraud or wire fraud face the same penalty.
This case was investigated by the FBI Denver Division and IRS-Criminal Investigation.
The defendants were prosecuted by Assistant U.S. Attorneys Matt Kirsch and Suneeta Hazra.