Owner of Sandusky Company Indicted for Fraud Related to Castalia Farms
Criminal charges were filed against the owner of a Sandusky equipment rental company for his fraudulent conduct related to Castalia Farms and other businesses, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.
A 32-count indictment was filed charging Scott C. Wagner, 51, of Perkins Township, with several criminal conspiracies, wire fraud, mail fraud, money laundering, and destruction of records. Tom Walters, Jr., of Swanton, is also charged in the indictment with conspiracy and mail fraud.
According to court documents filed in the case:
Castalia Farms was a hospitality facility owned by Owens-Illinois, Inc. and used by the company as a recreational facility since the 1930s. O-I closed the facility in 2012 and later sold the property.
Michael K. Conrad, 48, of Castalia, Ohio, managed Castalia Farms. In this capacity, Conrad had an occasional need for industrial equipment and was a regular customer of Wagner and his company, Construction Equipment & Supply (CES), a Sandusky business that rented and sold industrial machinery and equipment for commercial use.
Wagner controlled the day-to-day operations of CES and submitted false invoices to Conrad that were then passed on to O-I for equipment rentals that never occurred, purchases of construction supplies and other goods that never occurred, purchases of construction supplies that were far in excess of what was actually delivered, and other fraudulent billings.
For example, O-I was billed more than $350,000 for 532 days of renting a piece of equipment used to grind trees and other vegetation, when in reality the grinder was not at Castalia Farms for nearly all the time it was billed to O-I as a rental, according to court documents.
In October 2010, Conrad submitted to O-I a fraudulent invoice for $47,925 worth of landscaping work, purportedly done at Castalia Farms. The work was actually done at Wagner’s personal residence. O-I paid the invoice in December 2010, according to court documents.
The indictment also charges Wagner with defrauding two other Northwest Ohio companies using a similar false-billing scheme. The first victim company, Kyklos Bearing International, LLC of Sandusky, Ohio, paid false invoices Wagner submitted with the assistance of a Kyklos Bearing International employee. The indictment alleges that the invoices were false because they sought payment for goods that were never delivered by CES.
The second victim company, Sawyer Structural Steel, Inc. of Holland, Ohio, paid false invoices Wagner submitted with the assistance of Tom Walters, Jr., a Sawyer Steel employee at the time of the fraud. Wagner and Walters conspired to defraud Sawyer Steel, where Walters worked as a general manager. To do this, Wagner submitted invoices to Sawyer Steel that were false, including invoices for supplies and other goods that were never delivered, equipment rentals that never occurred and the purchase of supplies and other goods that were far in excess of what was actually delivered, according to court documents.
Conrad has already pleaded guilty to crimes related to his role in the conspiracy and is awaiting sentencing.
If convicted, each defendant’s sentence will be determined by the Court after reviewing factors unique to his case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
This case is being prosecuted by Assistant U.S. Attorney Gene Crawford following an investigation by the Federal Bureau of Investigation, Sandusky, Ohio, with the assistance of the Ohio Bureau of Criminal Investigation and the Erie County Sheriff’s Office.
A charge is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.