Granger, Indiana Man Sentenced to Over 5 Years in Prison and Ordered to Pay Over $1.6 Million in Restitution

SOUTH BEND – A former South Bend senior executive at a Mishawaka business has been sentenced to 63 months in federal prison and 1 year of supervised release, and was ordered to pay $1,666,721.10 in restitution for devising a scheme to defraud his former employer, announced U.S. Attorney Kirsch. 

James Cotton, age 58, of Granger, Indiana, was sentenced before U.S. District Court Judge Robert L. Miller, Jr., upon his plea of guilty to wire fraud that was entered earlier this year. He admitted that from approximately January 2009 to October 2017, he devised a fraud scheme to obtain money from his employer by means of false representations. In particular, Mr. Cotton created five sham businesses which did not have any actual employees and did not engage in any actual legitimate business activity. Mr. Cotton then fabricated fake invoices from these five sham businesses and sent those invoices to his employer to obtain payment for purported goods and services. Mr. Cotton approved the sham invoices on behalf of his employer, which then issued payment checks for each invoice. Mr. Cotton obtained the checks, deposited them into bank accounts opened in the names of the sham businesses, and then withdrew the money from these accounts for his own personal use and benefit. 

“The amount of Mr. Cotton’s fraud is staggering, with over $1.6 million in loss to his employer. With the great work of the FBI, we were able to bring this case to a successful conclusion with an order of restitution and significant jail time,” said U.S. Attorney Thomas L. Kirsch II.

"We expect the people we work with to be honest and trustworthy, but Mr. Cotton chose to betray his employer’s trust for his own financial gain,” said Grant Mendenhall, Special Agent in Charge of the FBI’s Indianapolis Division. “The FBI and our law enforcement partners will continue to investigate cases such as this to ensure those who take advantage of others through illegal and criminal behavior are held accountable.”

This case was investigated by the FBI and handled by Assistant United States Attorney Luke N. Reilander.

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