United States Attorney's Office District of Connecticut
Press Release

FORMER VP OF NEW JERSEY COMPANY ADMITS ACCEPTING PAYMENTS FOR ASSISTANCE IN DEFRAUDING LENDER

Kevin J. O’Connor, United States Attorney for the District of Connecticut, today announced that JERRY D’AQUINO, 63, of Lagrangeville, New York, waived his right to indictment and pleaded guilty today before United States Magistrate Judge Donna F. Martinez in Hartford, to one count of aiding and abetting mail fraud in connection with the defrauding a commercial lender, Siemens Financial Services, Inc., out of approximately $11.5 million.  D’AQUINO also pleaded guilty to one count of conspiring to defraud the Internal Revenue Service.

According to documents filed with the Court and statements made in court, D’AQUINO was the Vice President of Operations of Haband, a New Jersey-based apparel company that uses direct mail solicitations.  Thomas Rueli was the president and owner of  Total Logistic Services, Inc. (“TLSI”), a Connecticut-based mail consolidation and transportation provider.  Haband was TLSI’s largest client.

In June 2004, Siemens and TLSI entered into a Loan and Security Agreement pursuant to which Siemens agreed to provide a credit facility to TLSI of up to $12 million in the form of a revolving line of credit.  The amount of money TLSI was able to borrow under the loan agreement was based upon a specified percentage of accounts receivable due to TLSI from its customers.  Thus, the higher TLSI’s accounts receivable were, the more money it could borrow from Siemens on the $12 million line of credit.  Under the loan agreement, Siemens had a security interest in all of TLSI’s assets, including its accounts receivable.

On June 1, 2004, the day of the closing of the loan agreement, Rueli represented to Siemens that TLSI’s current accounts receivable totaled approximately $10 million.  The vast majority of this amount was false and fraudulent in that TLSI’s true accounts receivable totaled nowhere near this amount.  D’AQUINO used his position at Haband to assist Rueli with the scheme.  On the date of the closing, but prior to the closing, a Vice President at Siemens called D’AQUINO and spoke with him in order to verify the amount of TLSI accounts receivable from D’AQUINO’s company.  D’AQUINO, with Rueli’s knowledge, falsely verified to Siemens that the receivable balance (i.e., the money owed to TLSI from Haband) was $4.8 million.  The truth, as D’AQUINO well knew at that time, was that TLSI’s accounts receivable from Haband were approximately $258,000.  As D’AQUINO knew, his company regularly paid TLSI invoices when they were received, and that as a result TLSI’s outstanding accounts receivable from D’AQUINO’s company generally did not exceed $500,000 at any given time.

In addition, from approximately June 2001 to at least August 2005, Rueli made clandestine payments to D’AQUINO, which D’AQUINO did not disclose to his employer.  D’AQUINO formed an entity called International Products Corporation (“IPC”), to which Rueli regularly sent between $2,000 and $4,000.  From June 2001 through December 10, 2005, these payments totaled approximately $314,000.

D’AQUINO made clear to Rueli that TLSI should not issue an IRS Form 1099 for these payments, as D’AQUINO did not want to report this income to the IRS.  In fact, D’AQUINO did not report these payments as income on either IPC’s federal income tax returns –  IPC filed no such returns with the IRS for the tax years 2001, 2002 or 2003 – or on his personal federal income tax returns.  The tax loss to the Government resulting from the conspiracy to defraud was $73,939.

D’AQUINO is scheduled to be sentenced by Chief United States District Judge Robert N. Chatigny on December 17, 2007, at which time D’AQUINO faces a maximum term of imprisonment of 25 years and a fine of up $9.4 million.

On October 31, 2006, Rueli pleaded guilty to two counts of mail fraud and one count of conspiracy to defraud the IRS.  On June 28, 2007, he was sentenced to 57 months of imprisonment.

The case was investigated by U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation Division.  The case is being prosecuted by Assistant United States Attorney Eric J. Glover.

CONTACT:

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov