A Houston businessman pleaded guilty Thursday to charges that he helped lead a scheme to give Zachry Industrial employees kickbacks so they would inflate invoices and cause the San Antonio company to overpay about $10 million for supplies.

David J. Reitman pleaded guilty to mail fraud and conspiracy to launder money at a hearing before Chief U.S. District Judge Fred Biery. As part of a plea deal, Reitman will face seven to 12 years in prison, four years of supervised release and restitution of $10 million when Biery sentences him Sept. 30.

Reitman admitted to a scheme in which four then-managers for Zachry, one of San Antonio’s largest employers, inflated invoices so the company would pay Reitman — who was president and a 30 percent owner of Mill & Safety Supply Co. — and co-owner Gary Schwing for items that never were delivered.

Additionally, a fifth now-former project manager wrongly diverted $100,000 to Reitman and Schwing from scrap metal sales that should have gone to Zachry between 2008 and 2010, court records say.

In turn, Reitman and Schwing gave the former Zachry workers kickbacks, according to court records.

Schwing is now the lone defendant awaiting trial, scheduled for Sept. 19. Six others, five of them ex-Zachry employees, pleaded guilty for their roles.

The inflated invoice scheme ran for seven years, from January 2003 to July 2010, court records said.

Zachry Industrial is part of Zachry Holdings Inc., which handles construction, engineering and industrial maintenance services. Zachry uncovered the invoice scheme for items such as hard hats, small tools and gloves and turned over its findings to the FBI and Internal Revenue Service Criminal Investigation division.

The probe found workers submitted false invoices and made entries in Zachry’s records to try to cover their tracks, court records said.

The records said Reitman and Schwing used a shell company, Louisiana Marine and Industrial Supplies, and a tool/equipment company, Constructors Rental & Supply, LLC, to funnel the ill-gotten proceeds and disguise the kickbacks.

As part of his plea deal, Reitman also agreed to a forfeiture order of $10 million, and his lawyers told Biery that he had already given up “several hundred thousand dollars” and was about to sell a home to help offset his restitution.

If you have been charged with a crime such as fraud, embezzlement, or money laundering.,  contact  white collar criminal lawyer Robert I. Kahn at (210) 225-6600 for a free consultation.

Law Offices of Robert I. Kahn

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Two men pleaded guilty Thursday for their roles in a scheme involving 800 fraudulent Texas vehicle titles that cheated lenders out of at least $3 million.

Roberto Quintero of Eagle Pass and Francisco Palacios of Laredo pleaded guilty to conspiracy to commit mail fraud.  They were among 19 people targeted in “Operation Title Sweep,” an investigation by the FBI, the Texas Department of Public Safety, U.S. Postal Service, the National Insurance Crime Bureau and other agencies.

Investigators accuse the suspects in Texas, Arizona and New Jersey of participating in “title washing”-disguising the title history of distressed-loan cars, or hiding the history of salvaged vehicles and of cars and trucks that can only be legally used for parts or scrap metal, so they could be sold or traded in as regular cars.

The rare federal case alleges that between August 2005 and October 2010, the defendants filed fraudulent state paperwork, seeking clean titles by taking advantage of a mechanic’s lien process that removed the names of the original owners and financial lien-holders.

The scheme used newspaper ads offering to assume car loans of people who were behind on payments, Assistant U.S. Attorney Sarah Wannarka told Chief U.S. District Judge Fred Biery.  Quintero and Palacios met with some of those owners as part of the scheme.

“The cars were driven to Mexico and would just sit there while fraudulent paperwork was created” to get new titles, Wannarka told the judge.  With the titles, the defendants sold many of the vehicles to unsuspecting consumers or third parties.  That deprived lenders of the cars that served as collateral for loans, and caused at least $3 million in losses to multiple financial institutions.

Quintero admitted he owes $258,454 in restitution.  Palacios owes $419,652 for his role.

One of the lead defendants, Brian Eugene Owensby, 56, of San Antonio, was arrested at a swanky house Nov. 18 in the Mexican city of Cardenas in Tabasco state.  Charged with 18 counts of mail fraud and two counts of aggravated identity theft, he was to be extradited to the United States, but a Mexican judge let him go.

Law Offices of Robert I. Kahn

111 Soledad St, Suite 1700, San Antonio, TX 78205 (210) 225-6600 Google Review | Website | Directions