Two Fitchburg Men Charged in Four-Year Fraud Scheme That Netted Over $350,000
|U.S. Attorney’s Office December 08, 2011|
MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced the unsealing of an indictment returned yesterday by a federal grand jury sitting in Madison. The indictment charged Steve Schmidt, 54, and Darren Ulatowski, 46, both of Fitchburg, Wis., with 15 counts of mail fraud, six counts of wire fraud, and one count of conspiracy to commit money laundering.
Schmidt and Ulatowski will make an initial appearance in U.S. District Court in Madison today at 3:00 p.m.
The indictment alleges that from 2003 to September 21, 2007, Schmidt and Ulatowski devised and participated in a scheme to defraud a Madison business, It’s Your Party (IYP), which designed and produced large entertainment events for corporate clients and individuals. During this time period, Schmidt worked for IYP and Ulatowski owned and operated House of Flowers (HOF), a combined floral shop and gift shop in Verona, Wis.
The indictment alleges that Schmidt and Ulatowski used a variety of methods to embezzle money and products from IYP and to misuse property and personnel from IYP for their own personal purposes, including the funding of HOF in order to keep it solvent and operational. The indictment alleges that the defendants caused IYP to sustain losses of approximately $351,104 as a result of the fraudulent conduct.
The indictment alleges the following acts by Schmidt and Ulatowski:
- using an IYP corporate credit card issued to Schmidt to make unauthorized purchases of products and services;
- misusing IYP property and staff for events that were disguised by the defendants as IYP-contracted events but were in reality unauthorized side deals conducted by the defendants;
- diverting products from IYP to HOP, including fresh floral products, dry floral products and gift shop inventory;
- misusing Schmidt’s position as the IYP payroll clerk and human resources manager to have IYP pay many of HOF’s payroll expenses; and
- misusing Schmidt’s access to the IYP computer accounting system to issue unauthorized checks.
The indictment also charges Schmidt and Ulatowski with conspiracy to commit money laundering, by taking IYP checks payable to themselves and their entities and depositing and transferring these funds between their personal and business bank accounts, and by issuing checks to themselves or to each other from these funds in their accounts.
The indictment also includes a criminal asset forfeiture allegation. The government is seeking forfeiture of $352,104 in fraud proceeds and $133,874 in money laundering proceeds.
If convicted, Schmidt and Ulatowski face a maximum penalty of 20 years in federal prison on each mail and wire fraud charge, and 20 years on the money laundering charge. The charges against them are the result of an investigation conducted by the Internal Revenue Service, Criminal Investigation Division; Federal Bureau of Investigation; and Dane County Sheriff’s Office. The prosecution of this case has been assigned to Assistant U.S. Attorney Daniel J. Graber.
You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.