The Feds have now charged ex-Systemax senior exec Gilbert Fiorentino and his brother and former colleague Carl, with allegedly perpetrating fraud to the tune of millions of dollars as well as evading tax.
The criminal case was last night confirmed by the US Attorneys’ Office for the southern district of Florida and the eastern district of New York, the Inland Revenue Services’ Criminal Investigation team and the FBI.
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Gilbert Fiorentino was formerly CEO of the Technology Products biz at Systemax and Carl was the veep of Systemax sub-brand TigerDirect until they exited the business in 2011 following whistleblower allegations.
The duo allegedly liaised with third parties to bag unlawful kickbacks in exchange for directing business to specific suppliers, receiving $9m in cash and other undocumented payments for steering $230m worth of orders to an Asian component maker, the FBI claimed.
Carl Fiorentino is suspected of pocketing more than $3m from a TigerDirect supplier that was used to pay for a waterfront residence in Florida, as well as millions of dollars of luxury furnishings including art and a high-end security system.
He is charged with one count of conspiracy to commit mail and wire fraud, multiple counts of mail and wire fraud, money laundering, and one count of tax evasion as he sought to hide his illicit gains. He faces a maximum 25 years in the slammer if found guilty.
Gilbert is alleged to have received hundreds of thousands of dollars in cash payments, including deliveries made to a parking lot at the Miami offices of TigerDirect when he was in charge of that subsidiary before his brother got the job. He also allegedly received gold coins valued at $150,000, and took delivery of luxury furniture and other goods for dodgy deals, it is claimed.
The FBI further claimed Gilbert misappropriated company merchandise, which included paying a third party $100,000 worth of electronics in return for the upkeep of his yacht.
'Wrong side of the law'
The FBI charged Gilbert with one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the IRS. If he is found guilty he could serve up to five years in an orange jumpsuit.
The SEC already investigated the kickback claims against Gilbert and decided to prevent him from becoming director at a publicly traded company again. He had coughed $65,000 as a penalty.
The Carl Fiorentino kickback case was initially probed by the US Attorney Office for the Eastern district of New York, with the help of the FBI New York Field Office and the IRS CI team in Miami. It was due to be heard in New York but transferred to Florida, where he is based and was employed.
US Attorney Wifredo A Ferrer said the two brothers put their “financial gain and lavish lifestyle” ahead of corporate responsibilities.
“They accepted kickbacks, driving up the price of the consumer electronics and passing the price increase to customers. The Fiorentinos took advantage of their positions of trust.”
FBI assistant director-in-charge George Venizelos alleged this was “true shareholder shakedown ... today the defendants find themselves on the wrong side of the law”.
The charges, which the FBI pointed out are still just accusations, are being prosecuted by the US Attorneys in New York and Florida. ®