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By | Paul Kunert 19th June 2013 11:24

Ex-Systemax veep cuffed, charged with $230m fraud

Carl Fiorentino bailed for $1m over wire, mail and laundering scams

Carl Fiorentino, a former president at reseller Systemax, has been charged with accepting bribes worth millions of dollars in return for directing $230m worth of business to certain components suppliers. He was arrested yesterday and released on a $1m personal surety bond.

If the name sounds familiar, that's because it is: his brother Gilbert Fiorentino, also an exec at Systemax, was suspended by the firm in spring 2011 for suspected fraud on the back of whistleblower claims. Gilbert Fiorentino then settled the charges by paying a $65,000 penalty, while the SEC then barred him from being the director of a PLC again.

Carl Fiorentino, once a president at Systemax sub-brand Tiger Direct, and a third brother, Patrick Fiorentino, who was veep of sales at the business, also left the business in April 2011, and were placed under investigation by the FBI in summer of that year over the reported theft of kit from another Systemax division, CompUSA.

A case was subsequently built against Carl, and in a government filing unsealed yesterday in the Eastern District Court (EDC) of New York, he was charged with mail fraud, wire fraud, money laundering conspiracy and conspiracy to commit mail and wire fraud.

It is alleged in the indictment that he bagged more than $7m in bribes and kickbacks from suppliers in Taiwan and Califorinia. Carl Fiorentino was in charge of procurement among his responsibilities at Tiger Direct and it is claimed from 2003 he "steered" business to those suppliers.

Tiger Direct is alleged to have paid over $157m for the Taiwanese component firm's kit and in return Carl Fiorentino got $6.5m. It is also claimed the California biz that sold memory and flash modules, did $80m of trade with Tiger Direct and the exec got $570,000 for this.

Carl Fiorentino allegedly hid the cash he got in return by submitting false conflict-of-interest forms to Systemax and by setting up a complex web of wire transfers and shell companies, the document claimed.

He was arrested at his $8m home yesterday, in a luxurious suburb of Florida. It is alleged that he used the filthy lucre to hire a hip hop production firm and pay for tennis lessons for his son.

The charges were announced by Loretta Lynch, US Attorney for the EDC of New York, who claimed Fiorentino "abused his position of trust, employing fraud and deceit to line his own pockets".

"Fiorentino had it all - a lucrative job and a high flying lifestyle. But as alleged in the indictment and court papers, his loyalties were neither to his employer nor its public shareholders but solely to himself," said United States Attorney Loretta Lynch.

If found guilty, Carl Fiorentino he could face up to 20 years in the slammer for each count. He will also be forced to give up his $8m home, over $7m dollars and a $250,000 fine, the Eastern District Court warned.

Systemax acknowledged the federal criminal charges against the former exec but refused to comment further.

According to a Bloomberg report, Fiorentino's attorney, Silvia Pinera-Vasquez, said the man was released on a $1m personal surety bond, and is expected to appear in the Eastern District Court next month.

On LinkedIn, Fiorentino is listed as the CEO and president at mobile, social and digital media marketing outfit XstremProductions LLC. He was unavailable for comment at the time of writing.

Back in 2011, Carl Fiorentino's brother Gilbert Fiorentino was alleged to have pocketed $400,000 in extra payments from external service providers, manufacturer representatives and others that conducted business with Systemax, the SEC said in September.

Prior to settling the charges with the $65K penalty, Fiorentino resigned, handing back stock and stock options valued at $9.1m, and repaid his annual bonus of $480,000 for 2010. ®

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