Sentencing in Xerox Toner-Fraud Case
On July 26th, the Rochester Democrat & Chronicle reported that four men have been sentenced for a scheme under which they are said to have defrauded Xerox.
The case first came to light last November. Last week, a federal judge sentenced three men for fraud, which involved toner supplies. The losses for Xerox were at first estimated to be $24 million, but were ultimately decided to be about $9.5 million.
U.S. District Judge Elizabeth Wolford imposed the following sentences: Kyle Haynes is to serve 30 months in federal prison; Bryan Day is to serve to 27 months; and Jason Haynes, the brother of Kyle, is to serve six months. The three will also be responsible for nearly $9.5 million in restitution to Xerox. David Haynes, the father of Jason and Kyle Haynes, was also sentenced to three years probation, including six months of home confinement, for filing false tax returns.
According to Assistant U.S. Attorney Richard Resnick: Haynes, Day and others created the Florida-based company HDH Graphics, which also went by the name Aldar Securities. The entities were “sham” printing companies, prosecutors said.
Xerox sold and leased equipment to a middle man, Florida resident Robert Lee Fisher, who then resold or leased equipment to HDH and Aldar. Those companies, known as “end use customers,” weren’t allowed to resell the equipment. Instead, they were expected to pay Xerox based on the number of prints they sold.
However, from 2008 to June 2013 the men lied about how much toner was being used by the companies, claiming that they had made 38.5 million prints. They instead sold the Xerox toner the companies had received to others.