29 August 2007 — Boston (MA): A former VP of Staples is facing more than three years in jail after admitting embezzling more than $500,000 from the Framingham-based office products company.
James Dorman, 40, formerly of Westborough, pleaded guilty earlier this week to eight counts of mail fraud, three counts of wire fraud and three counts of money laundering.
Prosecutors claimed Dorman, who was the VP of marketing for the company’s contract division, was authorised to approve the payment of invoices submitted by third-party vendors who did work for Staples.
According to prosecution papers, Dorman embezzled at least $584,826 from the company during the two years before he was fired by submitting invoices for non-existent vendors. He also misused corporate travel funds to pay for personal travel and travel-related expenses for friends.
In addition, it was alleged he used a Staples company credit card for shopping and adult entertainment. Dorman, who began working for Staples in 1995, was fired in November 2005 after the company became aware of the embezzlement.
His attorney, Jeffrey Denner, said Dorman pleaded guilty to all charges in his indictment because he wanted to admit his wrongdoing and move on with his life. "It was an unfortunate incident that did not reflect the nature of Jim Dorman’s personal or professional history," Denner said. "It was a real aberration."
Sentencing is scheduled for 28 January. Dorman had faced up to 20 years in prison for each of the mail and wire fraud charges and up to ten years on each of the money laundering charges.
Federal prosecutors are recommending a prison sentence of at least 41 months and restitution of $584,826, the amount he embezzled from his former employer. In a section of the original indictment, presented to court last year, Dorman was accused of fraudulently using his corporate American Express card to pay for charges at bars and strip clubs “for which he sought reimbursement" from Staples.
According to the court filing, Dorman embezzled at least $584,826 during the two years before he was caught and fired, and tried to embezzle at least $600,000 more, in both cases by submitting false invoices to hide payments to three individuals, who are understood to be personal friends.
Justice Department spokeswoman Samantha Martin would only identify those people as "friends" of Dorman’s and said that they weren’t Staples employees. The indictment identifies them as: "AW and MA, who lived in Texas, and BB, who lived in Hungary."
Ultimately, Dorman approved at least 33 fictitious vendor invoices that were submitted in the names of the three people or business entities tied to them, in turn leading Staples to send out checks through the US mail or other carriers, the court filing stated. The scheme allegedly relied on misrepresenting the role of a Staples contractor, TraveLeaders, a Coral Gables (FL), company that Staples still uses to negotiate hotel contracts, airfares, and similar travel services.
But Dorman often had TraveLeaders make arrangements for his three friends outside the scope of Staples marketing department activities, prosecutors allege. These included arrangements to fly the person known as "AW" and a friend to Los Angeles for three days for the 2004 Grammy Awards, the charges alleged.
Dorman also misused his American Express card to pay for unauthorised expenses "related to the three individuals, including shopping excursions, adult entertainment, bar tabs, and escort services," according to the filing, which continues, "Dorman sought and received reimbursement by Staples for certain of these charges".
At other times Dorman instructed the friends to return some of the stolen money to him, the charges say, which he deposited into a bank account he used for personal expenses such as payments toward a home equity line.
In one episode cited in the filing, Dorman tried to cover up the fraud by having Staples’ accounts payable department issue a check for $200,000 to TraveLeaders, but had the check diverted to AW, who tried to deposit it into an account she controlled. She "was prevented" from doing so for reasons the filing didn’t detail.
Dorman eventually had Staples pay TraveLeaders duplicate checks for $200,000, funds he told the company to put into an account he controlled — but the scheme was discovered "before Dorman was able to misappropriate the entire $400,000," the filing states.
Dorman and his lawyers will have a chance to recommend less time in prison, but no less than 36 months.
Dorman’s lawyer, Brad Bailey, had said last year that his client would plead not guilty. This week he said: "There had been negotiating between my client and the US attorney’s office, and those negotiations are reflected in the plea agreement."