Thursday, October 29, 2020

Former Construction Firm CFO Charged With Fraud and Embezzlement

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The former chief financial officer of a Sussex County retail construction company was arrested last week and charged with defrauding the company and several lenders, including by embezzling millions of dollars, according to U.S. Attorney Craig Carpenito.

Jonathan Baker, 38, of Green Township, was indicted on five counts of wire fraud and three counts of money laundering, authorities said.

According to documents filed in this case and statements made in court:

Baker held the title of CFO of Victim-Company 1, a small, privately held retail construction company located in Sparta, New Jersey. The company acted as a construction manager and a general contractor for construction projects, such as new business offices, retail spaces, and restaurants. Baker also held the title of manager of Victim-Company 2, which held 100 percent of the voting and equitable interest in Victim-Company 1.

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From 2015 through 2018, Baker defrauded both companies and several commercial lenders, embezzling millions from the companies and fraudulently inducing commercial lenders into providing funds to Baker and his associated entities through fraudulent use of Victim-Company 1’s name, bank statements, balance sheet, and bank accounts.

Baker misappropriated millions of dollars from the Victim-Companies’ bank accounts and used the funds for his personal expenses, including mortgage payments on Baker’s residence, the purchase of a BMW, and the purchase of six donkeys. He also used the Victim-Companies’ credit cards to make unauthorized personal purchases.

Baker obtained funds by causing Victim-Company 1 to enter into agreements with commercial lenders through falsified documents, such as false resolutions of the Board of Directors of Victim-Company 1.

Baker concealed the fraud by making false statements to members of the Victim-Companies after they confronted him with evidence of the fraud. He falsely claimed that a commercial lender had made a mistake in filing a lien against Victim-Company 1 and repeatedly misrepresented that the commercial lender would be issuing a retraction and apology.

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Baker then refused to meet or join conference calls with the members of the companies to discuss the liens against Victim-Company 1, refused to produce the Companies’ bank statements, changed the locks on the Companies’ offices, and attempted to disable the Companies’ email and phone system.

The wire fraud counts each carry a maximum potential penalty of 20 years in prison and $250,000 fine, or twice the gross gain or loss from the offense. The money laundering counts each carry a maximum potential penalty of 10 years in prison and $250,000 fine, or twice the gross gain or loss from the offense.

Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to the charges.

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