BALTIMORE, MD—A Bel Air, Maryland, man was sentenced to federal prison this week for his role in a $29 million embezzlement and kickback scheme that defrauded his employer, a Harford County manufacturer.
U.S. District Judge Deborah K. Chasanow sentenced Eugene Andrew DiNoto, 54, to concurrent terms of 70 months for conspiracy to commit wire fraud and engaging in an illegal monetary transaction, and 64 months for tax evasion. DiNoto will also serve three years of supervised release following his prison term.
The sentence was announced by U.S. Attorney for the District of Maryland Kelly O. Hayes, along with Acting Special Agent in Charge Amanda M. Koldjeski of the FBI’s Baltimore Field Office and Special Agent in Charge Kareem A. Carter of IRS-Criminal Investigation’s Washington Field Office.
According to his guilty plea, DiNoto was a longtime employee of “Company 1,” a global family-owned business with manufacturing facilities in Belcamp and Abingdon, Maryland. Starting in 2012, DiNoto and another employee, Elliott Kleinman, used their management positions to execute a fraudulent billing scheme, receiving illegal kickbacks from various drum vendors that supplied Company 1. The company used drums to store and transport its products.
Anthony P. Urcioli Sr., 81, of Park Ridge, New Jersey, owner and president of Tunnel, Barrel & Drum Co. Inc. (TBD) and Hartford Fibre Drum Inc. (Hartford), both drum suppliers to Company 1, participated in the scheme. DiNoto and Kleinman arranged with Urcioli for TBD and later Hartford to fraudulently invoice Company 1 for more drums than were actually delivered. Urcioli then split the excess payments with DiNoto and Kleinman.
From January 2012 to January 2020, DiNoto regularly contacted Urcioli to coordinate the fraudulent invoicing. DiNoto would approve the inflated invoices, which were then sent to Company 1’s headquarters for payment. Urcioli would send handwritten purchase order tickets detailing the legitimate and bogus orders, along with kickback checks from TBD and Hartford, to DiNoto’s and Kleinman’s personal residences.
To conceal the kickbacks, DiNoto instructed Urcioli to make checks payable to “Sandpiper Enterprises,” a company linked to DiNoto that conducted no actual business. Kleinman requested checks be made out to “EDK Management, LTD.” Urcioli complied, even writing “drums” on the checks to create the appearance of legitimate wholesale purchases. DiNoto deposited his kickback checks into a commercial bank account for Sandpiper Enterprises before transferring funds to his personal accounts.
Between January 2012 and January 2020, DiNoto falsely invoiced Company 1 for a total of $20,300,757 through TBD and Hartford. DiNoto’s share of these kickbacks was approximately $7,071,106. Over the same eight-year period, DiNoto also used other drum vendors to defraud Company 1, submitting and approving invoices totaling approximately $9,197,181. The total loss to Company 1 from the scheme was approximately $29,497,938.
Additionally, DiNoto failed to report more than $7 million in kickbacks as income on his tax returns from 2017 through 2019, resulting in a loss of approximately $1,374,694 to the U.S. government.
Kleinman was previously sentenced to 42 months in prison and three years of supervised release. Urcioli received a sentence of time served and 12 months of supervised release. Both Kleinman and Urcioli were ordered to pay restitution totaling $19,300,757.
Photo by Sora Shimazaki from Pexels
