Sykesville Business Owner Sentenced to Two Years in Prison in $11 Million Fraud Scheme
BALTIMORE, MD—U.S. District Judge J. Frederick Motz sentenced Rolf Ramelmeier, age 79, of Sykesville, Maryland today to two years in prison followed by three years of supervised release for mail fraud and money laundering in connection with a 10 year scheme to defraud Northrop Grumman Corporation. Judge Motz also entered an order requiring Ramelmeier to forfeit $11,238,519, and pay restitution of $11,740,925.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.
Ramelmeier owned and operated JADM. Inc., selling or brokering natural gas sales, out of his residence. JADM’s sole client for many years was the Northrop Grumman Corporation. JADM supplied natural gas to several Northrop Grumman facilities l in Linthicum, Maryland. Ramelmeier obtained the gas from a supplier, such as UGI Energy Services (UGI) or PEPCO. BG&E transported the gas from UGI or PEPCO to the Northrop Grumman facilities. JADM would then invoice Northrop Grumman each month, and Northrop Grumman would pay JADM.
According to his plea agreement, from at least 2003 to December 2013, Ramelmeier overcharged Northrop Grumman for the natural gas delivered to the Linthicum facilities. Ramelmeier concealed this scheme by falsifying invoices and other documents, and by using a false corporate identity and bank accounts that he maintained in the names of shell entities.
Specifically, Ramelmeier represented himself as a gas broker and led the UGI or PEPCO personnel to believe that their company was entering into sales contracts directly with Northrop Grumman when, in fact, Northrop Grumman had no knowledge of these agreements. The contracts required UGI and PEPCO to submit their invoices to Northrop Grumman by mail to a post office box in Roanoke Rapids, North Carolina, and by e-mail to Ramelmeier at JADM. In fact, Northrop Grumman had no such post office box. Rather, at Ramelmeier’s direction, an associate opened that post office box using the name “Northrop Sensors.” The associate regularly retrieved the mail from the post office box, including the invoices from PEPCO and UGI, and forwarded that mail to Ramelmeier. Ramelmeier created invoices on JADM letterhead which charged the real Northrop Grumman for more than the amount of natural gas that UGI or PEPCO had invoiced. Northrop Grumman then paid JADM on the inflated JADM invoices, first by check and then, in more recent years, by wire transfer to JADM’s bank account.
Ramelmeier transferred those Northrop Grumman payments from the JADM account into a bank account that he held in the name of a shell company with no assets or business. He then transferred all or most of the funds again into an account he had opened in the name of Northrop Group Sensor Division (NGS Div.) with an address at the post office box in Roanoke Rapids. Ramelmeier used NGS Div. checks to pay UGI or PEPCO for their original invoices, deceiving those companies into believing that they were being paid by Northrop Grumman. Ramelmeier kept the difference between the original amount invoiced by UGI and PEPCO, and the amount that Northrop Grumman paid based on JADM’s inflated invoice, for his own personal use and benefit.
As a result of the fraudulent scheme, Ramelmeier caused Northrop Grumman to pay him at least $11,238,519 for natural gas that was never actually provided.
In December 2013, Northrop Grumman noticed some unusual charges by JADM for natural gas purportedly used at one of the Linthicum locations, which Ramelmeier falsely claimed was a JADM billing error. Ramelmeier offered to credit Northrop Grumman for the overcharge. Suspicious of Ramelmeier’s explanation, Northrop Grumman hired a consulting firm to analyze the invoices. The consulting firm compared the amounts of gas delivered per JADM’s invoices to BG&E’s records, and determined that between 2003 and 2013, JADM overcharged Northrop Grumman by $11,238,519.
On May 16, 2014, Northrop Grumman representatives confronted Ramelmeier about the overcharges. Ramelmeier falsely claimed that the billing errors occurred because corrupt employees doing the billing for JADM had engaged in embezzlement. In fact, JADM had no employees. Ramelmeier also falsely claimed that he could not provide Northrop Grumman with his billing records because his company computer files were corrupted.
On May 19, the first business day following his confrontation with the Northrop Grumman representatives, Ramelemeier used $82,626.54 of the fraud proceeds to pay off the entire mortgage balance on his residence. The next day, the post office box in Roanoke Rapids was closed.
United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Kathleen O. Gavin and Richard C. Kay, who prosecuted the case.