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UNITED STATES DISTRICT COURT
COUNT ONE -- SHERMAN ACT CONSPIRACY The Grand Jury charges: 1. Mitchell E. Mosallem, John Ghianni, and John F. Steinmetz are hereby indicted and made defendants on the charge stated below. During the period charged in this Count: 2. Defendant Mitchell E. Mosallem (hereinafter "Mosallem") resided in Manhattan, New York. Mosallem was vice president and later executive vice president and director of graphic services for Grey Global Group, Inc. or its predecessors or affiliates, including Grey Advertising, Inc. (hereinafter collectively "Grey"). As director of graphic services, Mosallem supervised approximately 70 employees. 3. Defendant John Ghianni (hereinafter "Ghianni") resided in Fort Lee, New Jersey. Ghianni was a salesperson representing a company that supplied graphic services, with responsibility for the Grey account. 4. Defendant John F. Steinmetz (hereinafter "Steinmetz"), a resident of Lincroft, New Jersey, was employed as a vice president and associate director of graphic services for Grey. As the associate director of graphic services, Steinmetz supervised approximately 40 employees and reported directly to Mosallem. 5. The Color Wheel, Inc., was a co-conspirator that was a company located in Manhattan, New York. The Color Wheel, Inc. was a supplier of graphic services, including retouching and separation services. The Color Wheel, Inc. was wholly owned by Haluk K. Ergulec. In 1999 The Color Wheel, Inc. merged with two other companies wholly owned by Haluk K. Ergulec, Manhattan Color Graphics, Inc., and A2, Inc., with The Color Wheel, Inc. being the surviving corporate entity. Manhattan Color Graphics, Inc., A2, Inc., and the pre- and post-merger The Color Wheel, Inc. are hereinafter collectively referred to as "Color Wheel." 6. Brown & Williamson Tobacco Corp. (hereinafter "B&W") marketed tobacco products. B&W, the third largest cigarette manufacturer and marketer in the United States, was headquartered in Louisville, Kentucky. B&W was a subsidiary of British American Tobacco p.l.c. It had approximately 5,000 employees. B&W's principal brands were Kool, Lucky Strike, Carlton, Kent, Capri, and Pall Mall. 7. Grey, headquartered in Manhattan, New York, provided advertising, marketing, public relations, and media services. Grey was one of the largest advertising agencies in the world, with as many as 12,000 employees and offices in 90 countries. Grey, which had approximately $8.3 billion in billings in 2000, had a client roster that included major consumer brand companies such as Brown & Williamson Tobacco Corp., The Procter & Gamble Co., GlaxoSmithKline p.l.c., Mars Inc., Hasbro, Inc., Eli Lilly & Co., 3M Co., and Joseph E. Seagram & Sons, Inc. 8. Whenever in this Count reference is made to any act, deed, or transaction of any corporation, such allegation shall be deemed to mean that the corporation engaged in such act, deed, or transaction by or through its officers, directors, agents, employees, or other representatives while they were actively engaged in the management, direction, control, or transaction of its business or affairs. 9. Various persons and firms, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof. These included a salesperson representing Color Wheel, Gabriel Casas ("Casas"); a Grey production employee; and other representatives of certain graphics services companies, including Lori Montgomery and James Rattoballi. 10. "Retouching" is the process of editing or otherwise manipulating a photograph or digital image to achieve an aesthetically desired result. The process employs a range of image processing tools which can be used to compose, change, and improve any type of image. 11. "Separation" is the act of decomposing an image or photograph into single-color layers, so that it may be printed with a printing press. 12. From approximately late 1994 until approximately 2001, pursuant to contracts that are the subject of this Count, B&W, through its agency Grey, purchased substantial quantities of retouching and separation services from members of the conspiracy. Materials and equipment were transported across state lines for use in performing some of the aforementioned retouching and separation services. 13. The activities of certain of the defendants and co-conspirators with respect to the sale of retouching and separation services to B&W, purchased through its agency Grey, including the sale of retouching and separation services pursuant to contracts that are the subject of this Count, were within the flow of, and substantially affected, interstate trade and commerce. 14. During the period covered by this Count, certain of the defendants and co-conspirators performed retouching or separation services on advertisements, including advertisements completed pursuant to contracts that are the subject of this Count, which were thereafter shipped across state lines in a continuous and uninterrupted flow of interstate commerce for inclusion in magazines and other media manufactured and produced outside the State of New York. These magazines and other media were also shipped across state lines in a continuous and uninterrupted flow of interstate commerce from their places of manufacture to customers located throughout the United States. 15. From approximately late 1994 until approximately 2001, the exact dates being unknown to the Grand Jury, the defendants and co-conspirators engaged in a combination and conspiracy in unreasonable restraint of interstate trade and commerce in violation of Section 1 of the Sherman Act (Title 15, United States Code, Section 1). 16. The aforesaid combination and conspiracy consisted of a continuing agreement, understanding, and concert of action among the defendants and co-conspirators, the substantial terms of which were to rig bids and allocate contracts for the supply of retouching and separation services to B&W, contracted through its agency Grey. 17. For the purpose of forming and effectuating the aforesaid combination and conspiracy, the defendants and co-conspirators did those things which they combined and conspired to do, including, among other things: 18. The aforesaid combination and conspiracy was formed and carried out, in part, within the Southern District of New York within the five years preceding the filing of this Indictment. (18 U.S.C. § 371) The Grand Jury further charges: 19. Mitchell E. Mosallem and Birj Deckmejian are hereby indicted and made defendants on the charge stated below. 20. Paragraphs 2, 5, 7, 10, and 11 of Count One of this Indictment are repeated, realleged, and incorporated in Count Two as if fully set forth in this Count. VI. THE RELEVANT PARTIES AND ENTITIES 21. Defendant Birj Deckmejian (hereinafter "Deckmejian") was a resident of Manhattan. Deckmejian was a salesperson representing Color Wheel, with responsibility for the Grey account. 22. Haluk K. Ergulec (hereinafter "Ergulec") was a co-conspirator who was a resident of Manhattan. Ergulec was the owner of Color Wheel. 23. Various persons and firms, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof. These included a salesperson representing Color Wheel, Gabriel Casas ("Casas"), and a Grey executive, Joseph Panaccione, aka Joe Payne ("Panaccione"). 24. "Prepress services" are the services and materials necessary to provide magazines and other print media with the images that they manufacture and publish. These services include retouching and separation services. 25. "Printing" is the use of a commercial printing press to produce multiple, printed copies of images inserted in print media or otherwise distributed to potential consumers. 26. "Graphic services" encompasses both prepress services and printing.
27. From approximately 1991 until approximately July 2000, the exact dates being unknown to the Grand Jury, in the Southern District of New York and elsewhere, defendants Mosallem and Deckmejian, and co-conspirators unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit an offense against the United States of America, to wit, to violate Title 18, United States Code, Section 1341, in violation of Title 18, United States Code, Section 371. 28. It was a part and an object of the conspiracy that defendants Mosallem and Deckmejian and others known and unknown, having devised and intending to devise a scheme and artifice to defraud clients of Grey, and for obtaining money and property from Grey clients by means of false and fraudulent pretenses, representations, and promises, unlawfully, willfully, and knowingly, for the purpose of executing such scheme and artifice, would and did place in post offices and authorized depositories for mail matter, matters and things to be sent and delivered by the Postal Service, and deposit and cause to be deposited matters and things to be sent and delivered by private and commercial interstate carriers, and take and receive therefrom, such matters and things, and knowingly cause to be delivered by mail and such carriers according to the directions thereon, and at the place at which they were directed to be delivered by the persons to whom they were addressed such matters and things, in violation of Title 18, United States Code, Section 1341. CONSPIRACY WAS CARRIED OUT The manner and means by which the conspiracy was sought to be accomplished included, among others, the following: 29. Grey developed advertising and marketing campaigns on behalf of its clients. Some of the advertising that Grey developed appeared in printed form, such as advertisements consisting of pictures and words in magazines. On behalf of its clients, through its graphics services department, Grey contracted with third parties that were suppliers of graphics services ("graphics suppliers") to provide services and materials related to advertising that appeared in print, including prepress services and printing. Defendant Mosallem was responsible for establishing procedures for the selection and supervision of graphics suppliers, including the initial review and authorization of their bills for payment. 30. Pursuant to agreements with certain of its clients, Grey was paid a fee for its creative work on behalf of the client, and for its supervision of the production of various components of a campaign, including supervision of prepress services and printing. In addition, pursuant to express written agreements with certain of its clients, Grey paid third parties, and was reimbursed by its clients, for "out-of-pocket" costs, including the actual costs of prepress services and printing provided by graphics suppliers. Grey received no markup or other profit on these "out-of-pocket" costs. Grey's clients relied on Grey's representations regarding the accuracy of the bills it presented for reimbursement or the amounts for which it sought reimbursement. 31. The advertising Grey developed and produced for each client often consisted of many separate jobs, with separate, corresponding contracts between Grey and various third party graphics suppliers. In many cases, Grey provided the initiative and exercised its discretion in selecting a graphics supplier and awarding a contract for a particular job or a related group of jobs (a "campaign") after seeking what purported to be competitive bids from multiple graphics suppliers. Usually, by the time a contract was awarded, Grey and its client had established a budget for the job, in part by referring to the prices quoted by the competing graphics suppliers. Employees of Grey's graphics services department were responsible for monitoring jobs to determine whether they would be completed within the established budgets and, if not, for seeking the client's approval to increase the budgets. The actual value of work done in connection with each job ultimately could be lower than, equal to, or higher than the established budget. 32. The third party graphics suppliers issued invoices to Grey, corresponding to the contracts they had been awarded, when those contracts were completed. Employees of Grey's graphics services department were responsible for reviewing the invoices for accuracy and authorizing them for payment. In situations where the graphics supplier's price for the work exceeded the budget for a particular job, the graphics supplier often knew, at the time it was prepared to seek payment, that it would not be paid in full for the work it had done. 33. Beginning in approximately 1991, defendant Mosallem agreed with defendant Deckmejian and certain co-conspirators to defraud certain Grey clients by causing Color Wheel to issue false and fraudulent invoices relating to its contracts to produce advertising services and materials. Typically, the invoices were false and fraudulent in that the quantities -- and thus the prices -- of certain line items listed in the invoices were inflated to allow defendant Color Wheel to recoup three specific types of expenses: 34. Ergulec instructed Casas, and defendant Mosallem instructed Panaccione, to track the expenses Color Wheel was to recoup, and to identify jobs to which those amounts could be added by fraudulently increasing the quantities and prices of certain line items in those jobs. 35. Between approximately 1991 and July 2000, Casas created and maintained lists of expenses and showed them to Panaccione, who then identified to which jobs those monies should be added and, in many cases, exactly where and how on the false and fraudulent invoices those charges should appear. On many occasions, Panaccione consulted with other employees in Grey's graphics services department in order to identify the jobs to which monies could be added, normally in situations where the job was expected to run under budget or where the job had not yet been budgeted but Color Wheel could be given an opportunity to increase its bid or price quotation. Casas periodically showed the lists to defendant Mosallem, defendant Deckmejian, and Ergulec and updated them on the status of the scheme. 36. Between approximately 1991 and July 2000, defendants Mosallem and Deckmejian and co-conspirators caused Color Wheel to issue to Grey numerous false and fraudulent invoices. 37. Defendant Mosallem and co-conspirators further caused Grey to pay the false and fraudulent invoices and then to seek reimbursement from its clients. 38. Certain of the checks issued by Grey to Color Wheel in payment of the false and fraudulent invoices were sent via the United States mail. 39. Certain of Grey's invoices to its clients, and corresponding checks issued by Grey clients in payment of the fraudulently inflated charges, were sent via the United States mail or by private or commercial interstate carrier. 40. Certain negatives, press proofs, and other portions of finished advertisements, which were produced by Color Wheel and the prices of which were fraudulently inflated pursuant to the charged conspiracy, were sent by Grey to magazines located throughout the United States by private or commercial interstate carrier. 41. In furtherance of the conspiracy and to effect the illegal objects thereof, defendants Mosallem and Deckmejian and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere:
The Grand Jury further charges: 42. Mitchell E. Mosallem is hereby indicted and made defendant on the charge stated below. 43. Paragraphs 2, 7, 10, and 11 of Count One and Paragraphs 24, 25, 26, and 29 through 32 of Count Two of this Indictment are repeated, realleged, and incorporated in Count Three as if fully set forth in this Count. 44. Co-conspirators, not made defendants herein, participated in the offense charged herein and performed acts and made statements in furtherance thereof. These included an independent salesperson ("CC-1") representing a graphics supply company ("GS-1") located in Manhattan. 45. From approximately 1990 until approximately 2001, the exact dates being unknown to the United States, in the Southern District of New York and elsewhere, defendant Mosallem and co-conspirators unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States of America, to wit, to violate Title 18, United States Code, Sections 1341 and 1346, all in violation of Title 18, United States Code, Section 371. 46. It was a part and an object of the conspiracy that defendant Mosallem and others known and unknown, having devised and intending to devise a scheme and artifice to defraud Grey and Grey's clients, and for obtaining money and property from Grey and Grey's clients by means of false and fraudulent pretenses, representations, and promises, and to deprive Grey and Grey's clients of their intangible right to the honest services of Grey's employees, unlawfully, willfully, and knowingly, for the purpose of executing such scheme and artifice, would and did place in post offices and authorized depositories for mail matter, matters and things to be sent and delivered by the Postal Service, and deposit and cause to be deposited matters and things to be sent and delivered by private and commercial interstate carriers, and take and receive therefrom, such matters and things, and knowingly cause to be delivered by mail and such carriers according to the directions thereon, and at the place at which they were directed to be delivered by the persons to whom they were addressed such matters and things, in violation of Title 18, United States Code, Section 1341 and 1346. CONSPIRACY WAS CARRIED OUT The manner and means by which the conspiracy was sought to be accomplished included, among others, the following: 47. During all or some of the period from approximately 1990 until approximately 2001, CC-1 paid defendant Mosallem cash kickbacks. The kickbacks were unknown to Grey and Grey's clients, who expected that Grey's employees would act in accordance with Grey's fiduciary obligation when awarding contracts to vendors. The amount of the kickbacks paid by CC-1 was approximately 6¼% of the total volume of contracts awarded by Grey to GS-1. CC-1 typically paid the cash kickbacks to defendant Mosallem on a monthly basis, usually over lunch or dinner at restaurants in Manhattan. In exchange for the cash kickbacks, defendant Mosallem ensured that GS-1 was placed on Grey's limited list of approved vendors, which defendant Mosallem had created, and further ensured that GS-1 would receive a portion of the total value of contracts for prepress services and printing awarded by Grey. By paying the kickbacks, CC-1 was able to maintain GS-1's prices at noncompetitive levels because he did not have to set GS-1's prices in response to open and honest competition from other vendors. As a result, Grey and its clients paid higher prices for prepress services and printing than they would have if Mosallem had aggressively and honestly solicited competitive prices from other vendors. 48. Between approximately 1990 and 2001, defendant Mosallem and CC-1 caused GS-1 to issue to Grey numerous invoices. 49. Defendant Mosallem and co-conspirators further caused Grey to pay the invoices and then to seek reimbursement from its clients. 50. Some of the checks issued by Grey to GS-1 in payment of the invoices were sent via the United States mail. 51. Some of Grey's invoices to its clients, and corresponding checks issued by Grey clients in payment of the invoices, were sent via the United States mail or by private or commercial interstate carrier. 52. Some printed materials, negatives, press proofs, and other portions of finished advertisements that were produced by GS-1 were sent by Grey to magazines located throughout the United States by private or commercial interstate carrier.
53. In furtherance of the conspiracy and to effect the illegal objects thereof, defendant Mosallem and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere:
The Grand Jury further charges: 54. Mitchell E. Mosallem is hereby indicted and made defendant on the charge stated below. 55. Paragraphs 2, 7, 10, and 11 of Count One and Paragraphs 24, 25, 26, and 29 through 32 of Count Two of this Indictment are repeated, realleged, and incorporated in Count Four as if fully set forth in this Count. 56. Various persons and firms, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof. These included a co-conspirator, James Rattoballi ("Rattoballi") who was a co-owner of a printing company located in Manhattan and also worked as a salesperson representing two Manhattan companies that provided prepress services. The printing company and two prepress service companies are hereinafter collectively referred to as "GS-2." 57. From approximately 1990 until approximately 2001, the exact dates being unknown to the United States, in the Southern District of New York and elsewhere, defendant Mosallem and co-conspirators unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States of America, to wit, to violate Title 18, United States Code, Sections 1341 and 1346, all in violation of Title 18, United States Code, Section 371. 58. It was a part and an object of the conspiracy that defendant Mosallem and others known and unknown, having devised and intending to devise a scheme and artifice to defraud Grey and Grey's clients, and for obtaining money and property from Grey and Grey's clients by means of false and fraudulent pretenses, representations, and promises, and to deprive Grey and Grey's clients of their intangible right to the honest services of Grey's employees, unlawfully, willfully, and knowingly, for the purpose of executing such scheme and artifice, would and did place in post offices and authorized depositories for mail matter, matters and things to be sent and delivered by the Postal Service, and deposit and cause to be deposited matters and things to be sent and delivered by private and commercial interstate carriers, and take and receive therefrom, such matters and things, and knowingly cause to be delivered by mail and such carriers according to the directions thereon, and at the place at which they were directed to be delivered by the persons to whom they were addressed such matters and things, in violation of Title 18, United States Code, Section 1341 and 1346. CONSPIRACY WAS CARRIED OUT The manner and means by which the conspiracy was sought to be accomplished included, among others, the following: 59. During all or some of the period from approximately 1990 until approximately 2001, Rattoballi paid defendant Mosallem kickbacks in the form of goods or services such as clothing, limousine service, and meals at restaurants. Rattoballi made arrangements with various suppliers of those goods and services so that defendant Mosallem could charge personal goods and services to GS-2's account and have the subsequent invoices paid by GS-2. The kickbacks were unknown to Grey and Grey's clients, who expected that Grey's employees would act in accordance with Grey's fiduciary obligation when awarding contracts to vendors. In exchange for the kickbacks, defendant Mosallem ensured that GS-2 was placed on Grey's limited list of approved vendors, which defendant Mosallem had created, and further ensured that GS-2 would receive a portion of the total value of contracts for prepress services and printing awarded by Grey. By paying the kickbacks, Rattoballi was able to maintain GS-2's prices at noncompetitive levels because he did not have to set GS-2's prices in response to open and honest competition from other vendors. As a result, Grey and its clients paid higher prices for prepress services and printing than they would have if Mosallem had aggressively and honestly solicited competitive prices from other vendors. 60. Between approximately 1990 and 2001, defendant Mosallem and Rattoballi caused GS-2 to issue to Grey numerous invoices. 61. Defendant Mosallem and co-conspirators further caused Grey to pay the invoices and then to seek reimbursement from its clients. 62. Some of the checks issued by Grey to GS-2 in payment of the invoices were sent via the United States mail. 63. Some of Grey's invoices to its clients, and corresponding checks issued by Grey clients in payment of the invoices, were sent via the United States mail or by private or commercial interstate carrier. 64. Some printed materials, negatives, press proofs, and other portions of finished advertisements that were produced by GS-2 were sent by Grey to magazines located throughout the United States by private or commercial interstate carrier.
65. In furtherance of the conspiracy and to effect the illegal objects thereof, defendant Mosallem and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere:
The Grand Jury further charges: 66. Mitchell E. Mosallem is hereby indicted and made defendant on the charge stated below. 67. Paragraphs 2, 7, 10, and 11 of Count One and Paragraphs 24, 25, 26, and 29 through 32 of Count Two of this Indictment are repeated, realleged, and incorporated in Count Five as if fully set forth in this Count. 68. Various persons and firms, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof. These included Haluk Ergulec, the owner of The Color Wheel, Inc. ("Color Wheel"), a company located in Manhattan, and certain employees of Color Wheel. 69. From approximately 1990 until approximately 2001, the exact dates being unknown to the United States, in the Southern District of New York and elsewhere, defendant Mosallem and co-conspirators unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit offenses against the United States of America, to wit, to violate Title 18, United States Code, Sections 1341 and 1346, all in violation of Title 18, United States Code, Section 371. 70. It was a part and an object of the conspiracy that defendant Mosallem and others known and unknown, having devised and intending to devise a scheme and artifice to defraud Grey and Grey's clients, and for obtaining money and property from Grey and Grey's clients by means of false and fraudulent pretenses, representations, and promises, and to deprive Grey and Grey's clients of their intangible right to the honest services of Grey's employees, unlawfully, willfully, and knowingly, for the purpose of executing such scheme and artifice, would and did place in post offices and authorized depositories for mail matter, matters and things to be sent and delivered by the Postal Service, and deposit and cause to be deposited matters and things to be sent and delivered by private and commercial interstate carriers, and take and receive therefrom, such matters and things, and knowingly cause to be delivered by mail and such carriers according to the directions thereon, and at the place at which they were directed to be delivered by the persons to whom they were addressed such matters and things, in violation of Title 18, United States Code, Section 1341 and 1346. CONSPIRACY WAS CARRIED OUT The manner and means by which the conspiracy was sought to be accomplished included, among others, the following: 71. During all or some of the period from approximately 1990 until approximately 2001, the owner, certain executives, and salespeople representing Color Wheel paid defendant Mosallem kickbacks in the form of cash, goods, or services. The kickbacks were unknown to Grey and Grey's clients, who expected that Grey's employees would act in accordance with Grey's fiduciary obligation when awarding contracts to vendors. In exchange for the kickbacks, defendant Mosallem ensured that Color Wheel was placed on Grey's limited list of approved vendors, which defendant Mosallem had created, and further ensured that Color Wheel would receive a portion of the total value of contracts for prepress services and printing awarded by Grey. By paying the kickbacks, Color Wheel was able to maintain its prices at noncompetitive levels because it did not have to set prices in response to open and honest competition from other vendors. As a result, Grey and its clients paid higher prices for prepress services and printing than they would have if Mosallem had aggressively and honestly solicited competitive prices from other vendors. 72. Between approximately 1990 and 2001, defendant Mosallem and co-conspirators caused Color Wheel to issue to Grey numerous invoices. 73. Defendant Mosallem and co-conspirators further caused Grey to pay the invoices and then to seek reimbursement from its clients. 74. Some of the checks issued by Grey to Color Wheel in payment of the invoices were sent via the United States mail. 75. Some of Grey's invoices to its clients, and corresponding checks issued by Grey clients in payment of the invoices, were sent via the United States mail or by private or commercial interstate carrier. 76. Some printed materials, negatives, press proofs, and other portions of finished advertisements, which were produced by Color Wheel, were sent by Grey to magazines located throughout the United States by private or commercial interstate carrier.
77. In furtherance of the conspiracy and to effect the illegal objects thereof, defendant Mosallem and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere:
The Grand Jury further charges: 78. Mitchell E. Mosallem is hereby indicted and made defendant on the charge stated below. 79. Paragraph 2 of Count One of this Indictment is repeated, realleged, and incorporated in Count Six as if fully set forth in this Count. 80. Various persons and firms, not made defendants herein, participated as co-conspirators in the offense charged herein and performed acts and made statements in furtherance thereof. These included owners, executives, and salespeople representing the graphics supply companies identified as "GS-1," "GS-2," and "Color Wheel" in Counts Three, Four, and Five of this Indictment. 81. From approximately 1990 until approximately 2001, the exact dates being unknown to the United States, in the Southern District of New York and elsewhere, defendant Mosallem and co-conspirators unlawfully, willfully, and knowingly did combine, conspire, confederate, and agree together and with each other to defraud the United States of America and an agency thereof, to wit, the Internal Revenue Service ("IRS") of the United States Department of the Treasury, in violation of Title 18, United States Code, Section 371. 82. It was a part and object of the conspiracy that defendant Mosallem and co-conspirators would and did defraud the United States of America and the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of income taxes due and owing from defendant Mosallem. CONSPIRACY WAS CARRIED OUT The manner and means by which the conspiracy was sought to be accomplished included, among others, the following: 83. During all or some of the period from approximately 1990 until approximately 2001, co-conspirators representing GS-1, GS-2, and Color Wheel paid defendant Mosallem kickbacks in cash and goods and services. Defendant Mosallem failed to account for the value of these kickbacks on the income tax returns filed by him and his spouse. XXII. OVERT ACTS 84. In furtherance of the conspiracy and to effect the illegal objects thereof, defendant Mosallem and others known and unknown, committed the following overt acts, among others, in the Southern District of New York and elsewhere: (26 U.S.C. § 7206(1)) The Grand Jury further charges: 85. On or about March 13, 1997, in the Southern District of New York and elsewhere, Mitchell E. Mosallem, a resident of Manhattan, New York, did willfully make and subscribe a U.S. Individual Income Tax Return, Form 1040, for the calendar year 1996, which was verified by defendant Mosallem's written declaration that it was made under penalties of perjury and was filed with the Internal Revenue Service, and which income tax return he did not believe to be true and correct as to every material matter, in that the income tax return reported taxable income of $172,979 and tax of $46,767, whereas, as defendant Mosallem then and there well knew and believed, his income and tax for calendar year 1996 were substantially in excess of the amounts reported, because said income tax return failed to report as income his receipt of cash and goods and services for his personal benefit from vendors to his employer. (26 U.S.C. § 7206(1)) The Grand Jury further charges: 86. On or about April 14, 1998, in the Southern District of New York and elsewhere, Mitchell E. Mosallem, a resident of Manhattan, New York, did willfully make and subscribe a U.S. Individual Income Tax Return, Form 1040, for the calendar year 1997, which was verified by defendant Mosallem's written declaration that it was made under penalties of perjury and was filed with the Internal Revenue Service, and which income tax return he did not believe to be true and correct as to every material matter, in that the income tax return reported taxable income of $176,352 and tax of $47,140, whereas, as defendant Mosallem then and there well knew and believed, his income and tax for calendar year 1997 were substantially in excess of the amounts reported, because said income tax return failed to report as income his receipt of cash and goods and services for his personal benefit from vendors to his employer. (26 U.S.C. § 7206(1)) The Grand Jury further charges: 87. On or about April 12, 1999, in the Southern District of New York and elsewhere, Mitchell E. Mosallem, a resident of Manhattan, New York, did willfully make and subscribe a U.S. Individual Income Tax Return, Form 1040, for the calendar year 1998, which was verified by defendant Mosallem's written declaration that it was made under penalties of perjury and was filed with the Internal Revenue Service, and which income tax return he did not believe to be true and correct as to every material matter, in that the income tax return reported taxable income of $325,919 and tax of $90,452, whereas, as defendant Mosallem then and there well knew and believed, his income and tax for calendar year 1998 were substantially in excess of the amounts reported, because said income tax return failed to report as income his receipt of cash and goods and services for his personal benefit from vendors to his employer. (26 U.S.C. § 7206(1)) The Grand Jury further charges: 88. On or about March 25, 2000, in the Southern District of New York and elsewhere, Mitchell E. Mosallem, a resident of Manhattan, New York, did willfully make and subscribe a U.S. Individual Income Tax Return, Form 1040, for the calendar year 1999, which was verified by defendant Mosallem's written declaration that it was made under penalties of perjury and was filed with the Internal Revenue Service, and which income tax return he did not believe to be true and correct as to every material matter, in that the income tax return reported taxable income of $46,356 and tax of $17,559, whereas, as defendant Mosallem then and there well knew and believed, his income and tax for calendar year 1999 were substantially in excess of the amounts reported, because said income tax return failed to report as income his receipt of cash and goods and services for his personal benefit from vendors to his employer. (26 U.S.C. § 7206(1)) The Grand Jury further charges: 89. On or about March 27, 2001, in the Southern District of New York and elsewhere, Mitchell E. Mosallem, a resident of Manhattan, New York, did willfully make and subscribe a U.S. Individual Income Tax Return, Form 1040, for the calendar year 2000, which was verified by defendant Mosallem's written declaration that it was made under penalties of perjury and was filed with the Internal Revenue Service, and which income tax return he did not believe to be true and correct as to every material matter, in that the income tax return reported taxable income of $158,163 and tax of $36,526, whereas, as defendant Mosallem then and there well knew and believed, his income and tax for calendar year 2000 were substantially in excess of the amounts reported, because said income tax return failed to report as income his receipt of cash and goods and services for his personal benefit from vendors to his employer.
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