LOS ANGELES — An East Los Angeles man who oversaw a scheme that embezzled more than $8 million from an industrial launderer that provided finishing services for Citizens of Humanity, a manufacturer of high-end designer jeans, pleaded guilty on March 21 to federal charges, reports the U.S. Attorney’s Office, Central District of California.
Luis Mariano Rodriguez, 48, who was the president of the Gardena-based CM Laundry LLC, pleaded guilty to one count of mail fraud.
Rodriguez admitted in court that he and three other businessmen participated in a scheme that submitted fraudulent invoices to CM Laundry, which paid the bogus bills, with the proceeds being shared by the men.
According to court documents, the invoices sent to CM Laundry were fraudulent in at least two ways.
First, the invoices included fictitious and inflated charges. Second, the invoices were issued by companies operated by Rodriguez’s associates, which served to conceal Rodriguez’s role in the scheme.
Rodriguez admitted that he sent e-mails to two of his associates that gave them detailed instruction on what information to include on each of the fraudulent invoices that were submitted to CM Laundry.
At Rodriguez’s behest, the third associate established a fictitious business name (dba) for K&R Industrial Supplies, and Rodriguez used this dba to submit other fictitious and inflated invoices to CM Laundry.
“This defendant victimized the very business that had entrusted him to lead it,” says U.S. Attorney Eileen M. Decker. “His fraud scheme, motivated by insatiable greed, threatened the viability of the victim company and the livelihood of its employees. Today’s guilty plea demonstrates the Department of Justice’s continued commitment to protecting American businesses from internal and external threats.”
Rodriguez admitted that an industrial supply company in Riverside, Calif., FI Products, billed CM Laundry for more than $3.6 million and transferred approximately $2.3 million of the proceeds to Rodriguez and a company he owned, Genesis Electronics Inc.
The Rancho Palos Verdes-based H&T Industrial Products, which was owned by another co-schemer, billed CM Laundry for more than $5.5 million and transferred approximately $3.6 million to Rodriguez and Genesis, according to court documents.
Fraudulent bills from K&R Industrial Supplies totaled approximately $639,939, of which approximately $493,617 was transferred to Rodriguez. As he admitted in court, Rodriguez generally kept approximately 75% of the proceeds generated by the false-invoice scheme.
Rodriguez pleaded guilty before U.S. District Judge Beverly Reid O’Connell, who is scheduled to sentence the defendant on June 20. As a result of the guilty plea, Rodriguez faces a statutory maximum sentence of 20 years in federal prison.
In related proceedings, Terry Jay Mink, 62, of Rancho Palos Verdes, the owner of H&T Industrial Products, pleaded guilty to conspiracy to commit mail fraud on Feb. 22. Mink faced a statutory maximum sentence of five years in prison during sentencing earlier this week.
Rene Exequiel Bautista, 43, of Sylmar, the owner of the company used in the scheme under the dba “K&R Industrial Supplies,” has agreed to plead guilty to one count of conspiracy to commit mail fraud. Bautista was arraigned in the case and is expected to enter his guilty plea.
“Bautista admitted Rodriguez produced and submitted all of the K&R Industrial Supplies invoices that were submitted to CM Laundry and paid by Citizens,” according to the complaint affidavit. “Bautista stated [in a deposition related to a civil lawsuit] that he did not create any of the K&R Industrial Supplies invoices, did not know what any of the invoiced items were and did not supply anything to CM Laundry.”
The fourth man allegedly involved in the scheme—Antonio Anguiano, 48, of Riverside, who was the owner of FI Products, which sold personal protective equipment—was indicted by a federal grand jury on March 4. The indictment charges Anguiano with five counts of mail fraud and two counts of aggravated identity theft.
Anguiano pleaded not guilty, and was scheduled to stand trial. If convicted, Anguiano faces a statutory maximum sentence of 20 years on each of the mail fraud counts and a consecutive mandatory two years on each of the aggravated identity theft charges.
As a result of civil litigation brought by CM Laundry and Citizens of Humanity, a Los Angeles Superior Court judge in November ordered Rodriguez and several other defendants to pay a total of $9,563,786, according to court documents.
The investigation into the embezzlement scheme was conducted by the Federal Bureau of Investigation and the Los Angeles Police Department, Major Crimes Division, Criminal Investigations Section.
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