Case 1:21-cr-00342-LKG Document 68 Filed 04/20/22 Page 1 of 14

U,S, Department of Justice

United States Attorney

District of Maryland

Manh J. Chrkz Suite 400 DIRECT:410-209-1810

Assistant Utited Statet Attomey 36 S. Cha P: Stteet MAIN: 410-209 4800
na y.clar*@lsdoj.sov Bahinoru, MD 21201-3119 FAX:410-962-0716

JSDC. EALTII'iORE March 3,2022

'22 APR 20 Pri3:39
Gerald C. Ruter, Esq.
Law Offices of Gerald C. Ruter, P.C
941 I Philadelphia Road, Suite O
Baltimore, MD 21237

Rc: united States v. Elliott Dennis Kleinman

Case No. LKG-21-0342

Dear Mr. Ruter

This letter, togethcr with the Sealed Supplement, confinns the plea agreement (this
..Agreement") that has been offered to your client, Ellioft Dennis Kleinman, (hereinafter
..Defendant"), by the United states Attomcy's office for the District of Maryland ("this officc").
If the Defendant accepts this offer, pleasc have him execute it in the spaces provided below. If
this offer has not been accepted by March ll,2022, it will be deemed withdrawn. The terms of
thc Agreement are as follows:

Offense ofConvi II

1. The Defendant agrees to plead guilty to the following offenscs charged in thc
Indictment: conspiracy to commit wire fraud, in violation of 18 U-S.C $ 1349 (Count One); and
tax evasion, in violation of 26 U.S.C. $ 7201 (Count Twcnty-Onc). The Defendant admits that hc
is, in fact, guilty ofthese offenses and will so advise the Court.

Elcments of thc Offcnses

2. The elements ofthe offense to which the Dcfendant has agreed to plead guilty, and
which this Office would prove if the case went to trial, are as follows:

Count One - Conspiracy to Commit Wirc lrraud

(18 U.S.C $ 1349)

a. The Defendant and at least one other person entered into an unlawful
agreement;

b The purpose of the agreement was to knowingly execute or attempt to

execute a scheme or artifice to deliaud and to obtain money, funds, assets

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or other property by means of materially false pretenses, representations, or

promises; and

c The Defendant knowingly and willfully became a member of the conspiracy.

Count Twenw-One - Tax Evasion

(26 U.S.C. $ 7201)

a. First, the existence ofa substantial tax deficiency, that is, that the Defendant
owed taxes to the Internal Revenue Service;

b. Second, that the Defendant committed an affirmative act constituting an

evasion or attempted evasion of the tax; and

c. The Defendant did so willfully.

Penalties

3. The maximum penalties provided by statute for the offense to which the Defendant
is pleading guilty is as follows:

Maximum Maximum
Count
I

Statute I Prison
Supervised
Relcasc Finc
Special
Assessment
I

I l8 u.s.c. $ r349 20 years 5 years $250,000 s 100

2l 26 U.S.C. d 7201 5 years 3 years $ 100,000 $ 100

a. Altemative Fine: If any person derived pecuniary gain from the offense, or
if the offense results in pecuniary loss to a person other than the Defendant, the Defendant may be
fined not more than the greater of twice the gross gain or twioe the gross loss. Given the amount
ofrestitution the Defendant owes, this Office is not seeking a fine.

b. Supervised Release: If the Court orders a term of supervised release, and

the Defendant violates the conditions of supervised release, the Court may order the Defendant
returned to custody to serve a term of imprisonment as permitted by statute, followed by an
additional term of supervised relcase. e
hi€.dl{tm{€rs€i( A "r2- n C
(,/
c. Restitution: The Court may order the Dcfendant to pay restitution pursuant
to 18 U.S.C. SS 3663, 3663A, and3664.

d. Payment: Ifa fine or restitution is imposed, it shall be payable immediately,

unless the Court orders othcrwise under l8 U.S.C. $ 3572(d). The Defendant may be required to
pay interest if the fine is not paid when duc.

e. Forfeiture: The Court may enter an order of forfeiture of assets directly

traceable to the offense, substitute assets, and/or a moncy judgmcnt equal to the value of the
property subject to forfeiture.

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f. Collection ofDebts: Ifthe Court imposes a fine or restitution, this Office's

Financial Litigation Unit will be responsible for collecting the debt. If the Court establishes a
schedule of payments, the Defendant a$ees that: (1) the full amount of the fine or restitution is
nonetheless due and owing immediately; (2) the schedule of payments is merely a minimum
schedule of payments and not the only method, nor a limitation on the methods, available to the
United States to enforce the judgment; and (3) the United States may fully employ all powers to
collect on the total amount of the debt as provided by law. Until the debt is paid, the Defendant
agrees to disclose all assets in which the Defendant has any interest or over which the Defendant
exercises direct or indirect control. Until the money judgment is satisfied, the Defendant
authorizes this Office to obtain a credit report in order to evaluate the Defendant's ability to pay,
and to request and review the Defendant's federal and state income tax returns. The Defendant
agrees to complete and sign a copy of IRS Form 8821 (relating to the voluntary disclosure of
federal tax retum information) and a financial statement in a form providcd by this Office.

Waiver of Ri hts

4. The Defendant understands that by entering into this Agreement, the Defendant
surrenders certain rights as outlined below:

a. Ifthe Defendant had pled not guilty andpersisted in thatplea, the Defendant
would have had the right to a speedy jury trial with the close assistancc of competent counsel.
That trial could be conducted by a judge, without a jury, if the Defondant, this Office, and the
Court all agreed.

b. Ifthe Defendant elcctcd a jury trial, thejury would

be composed oftwelve
individuals selected fiom the community. Counsel and the Defendant would have the opportunity
to challenge prospective jurors who dcmonstrated bias or who werc otherwise unqualified, and
would have the opporhrnity to strike a ccrtain number ofjurors pcrcmptorily. All twclvc jurors
would have to agree unanimously beforc thc Defcndant could be found guilty of any count. Thc
jury would be instructed that the Defendant was presumed to bc innoccnt, and that prcsumption
could be overcomc only by proofbeyond a reasonable doubt.

c. If the Defendant wcnt to trial, the Govemnrcnt would have the burden of
proving the Dcfendant guitty beyond a rczrsonablc doubt. The Defcndant would have thc right to
confront and cross-examine the Government's witnesses. Thc Dcfcndant would not have to
present any defense witnesses or evidencc whatsoever. Ifthe Defcndant wanted to call witnesses
in defense, however, the Defendant would have thc subpoena power of thc Court to compel the
witnesses to attend.

d. The Defendant would have the right to testiry in the Defendant's own
defense the Defendant so chose, and thc Dcfendant would have thc right to refuse to testiF/. If
if
the Defendant chose not to testiry, the Court could instruct the jury that they could not draw any
adverse inference from the Defendant's decision not to testiry.

e. Ifthe Defendant wcre found guilty after a trial, the Defendant would havc
the right to appeal the verdict and the Court's pretrial and trial decisions on the admissibility of

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evidence to see if any elrors were committed which would require a new trial or dismissal of the
charges. By pleading guilty, the Defendant knowingly gives up the right to appeal the verdict and
the Court's decisions.

f. By pleading guilty, the Defendant will be giving up all of these rights,

except the right, under the limited circumstances set forth in the "Waiver of Appeal" paragraph
below, to appeal the sentence. By pleading guilty, the Defendant understands that the Defendant
may have to answer the Court's questions both about the rights being given up and about the facts
of the case. Any statements that the Defendant makes during such a hearing would not be
admissible against the Defendant during a trial except in a criminal proceeding for perjury or false
statement.

g. If the Courtaccepts the Defendant's plea of guilty, thc Defendant will be

giving up the right to filc and have the Court rule on pretrial nrotions, and there will be no further
trial or proceeding ofany kind in the above-referenced criminal case, and the Court will find the
Defendant guilty.

h. By pleading guilty, the Defendant will also be giving up certain valuablc

civil rights and may be subjcct to deportation or other loss ofimmigration status, including possible
denaturalization. The Defendant recognizes that if the Defendant is not a citizen of the United
States, or is a naturalizcd citizen, pleading guilty may have consequences with respect to the
Defendant's immigration status. Under federal law, conviction for a broad range of crimes can
lead to adverse immigration consequenccs, including automatic removal from the United States.
Removal and other immigration consequences are the subject ofa separate proceeding, however,
and the Defendant understands that no one, including the Defendant's attomey or the Court, can
predict with certainty the effect of a conviction on immigration status. Thc Defendant is not
relying on any promise or belief about the immigration consequences of pleading guilty. The
Defendant nevertheless affirms that the Defendant wants to plead guilty regardless ofany potential
immigration consequenccs.

Advisory Scntencins Guidelincs Apply

5. The Defendant understands that the Court will determine a sentcncing guidelines
range for this case (henccforth the "advisory guidclines range") pursuant to thc Sentencing Rcforrn
Act of 1984 at l8 U.S.C. $$ 3ss1-3742 (cxcepting 18 U.S.C. $$ 3553(b)(l) and 3742(e)) and 28
U.S.C. $$ 991 through 998. The Defendant further understands that the Court will imposc a
sentoncc pursuant to thc Scntencing Rcform Act, as exciscd, and must takc into account thc
advisory guidelines rangc in establishing a reasonable sentcnce.

Factual and Advisory Guidelincs Stipulation

6. This Office and the Defendant understand, agree, and stipulate to the Statement of
Facts set forth in Attachment A hereto, which this Ofhce would prove bcyond a rcasonable doubt,
and to the following applicable sentencing guidelines factors:

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Count One Conspiracy to Commit Wire F-raud

a. The parties agree and stipulate that pursuant to U.S.S.G. $ 281.1(a)(1)the

base offense level for Count One (conspiracy to commit wire fiaud) is seven (7). The offense
involved a loss of approxim ately $20,300,7 57. Therefore, pursuant to U.S.S.G. $ 28l.l(bXlXK),
an upward adjustment of twenty (20) levels is warranted because the loss amount was more than
$9,500,000 but less than $25,000,000, resulting in an adjusted offense level oftwenty-seven (27).

b. Pursuant to U.S.S.G. $ 281.1(bX1OXC) a twoJevel (2) upward adjustment

is warranted because the offense involved sophisticated means, resulting in an adjusted offense
level of twenty-nine (29).

c. Pursuant to U.S.S.G. $ 381.3 a twolevel (2) upward adjustment is

warranted because the Defendant abused a position ofprivate trust that significantly facilitated the
commission and concealment of the criminal activity, rcsulting in an adjusted offense level of
thirty-one (31).

d. Pursuant to U.S.S.G. $ 3B1.2(b) a twoJevcl (2) downward adjustment is

warranted becausc the Defendant was a minor participant in the criminal activity, resulting in an
adjusted offense level oftwenty-nine (29).

Count Twenty-One - T itx liv itsl0ll

e. The parties agree that pursuant to U.S.S.G. $$ 1B 1.3(a)(3), 2T 1. I (a)(t) and

2T4.1(G) the base offense level for Count Twenty-One (tax evasion) is eighteen (18), because the
tax loss was morc than $250,000.

f. Pursuant to U.S.S.G. $ 2Tl.l(bxl) a two-level (2) upward adjustment is

warranted becausc the Dcfcndant failed to report or to correctly identify the sourcc of incomc
exceeding $10,000 in any year from criminal activity, resulting in an adjusted offcnse lcvel of
twenty (20).

g. The partics agree that pursuant to U.S.S.G. $ 3D1.4, thc two counts are
grouped together. Therefore, the final adjusted offense level is trvcnty-nine (29), becausc Count
One's adjusted offcnse lcvcl is higher than the offense lcvcl for the other count.

h. This Office does not opposc a twolevel reduction in the Defendant's

adjusted offense level, based upon the Defendant's apparent pronipt recognition and affirmativc
acceptance of personal rcsponsibility for his criminal conduct. This Office agrces to make a
motion pursuant to U.S.S.G. $ 381.1(b) for an additional one-levcl decrease in recognition ofthe
Defendant's timely notification of his intention to plead guilty. This Office may oppose any
adjustment for acceptance of responsibility under U.S.S.G. $ 3E I .l (a) and may decline to make a
motion pursuant to U.S.S.G. $ 3E1.1(b), if the Defendant: (i) fails to admit each and every item in
the factual stipulation; (ii) denies involvement in the offense; (iii) gives conflicting statements
about the Defendant's involvement in the offense; (iv) is untruthful with the Court, this Office, or
the United States Probation Office; (v) obstructs or attempts to obstruct justice prior to sentencing;
(vi) engages in any criminal conduct between the date of this Agreement and the date of

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sentencing; (vii) attempts to withdraw the plea of guilty; or (viii) violates this Agreement in any
way

7. There is no agreement as to the Defendant's criminal history and the Defendant

understands that the Defendant's criminal history could alter the Defendant's offense level.
Specifically, the Defendant understands that the Defendant's criminal history could alter the final
offense level if the Defendant is determined to be a career offender or ifthe instant offense was a
part ofa pattern of criminal conduct fiom which the Defendant derived a substantial portion ofthe
Defendant's income.

8. Other than as set forth above, no other offense characteristics, sentencing guidelines
factors, potential departures or adjustments set forth in the United States Sentencing Guidelines
are in dispute or will be raised in calculating the advisory guidelines range.

Oblieations of th e Parties

9. At the time of sentencing, this Office and the Defendant reserve the right to
advocate for a reasonablc sentence, period of supervised release, ancl/or fine considering any
appropriate factors under l8 u.s.c. g 3553(a). This office and the Defendant reserve the right to
bring to the court's attention all information with respect to the Defcn<lant's background,
character, health, and conduct that this office or the Defendant deem relevant to sentencing.

Waiver of Aooeal

10. In exchange for the concessions made by this office and the Defendant in this
Agreement, this Office and the Defendant waive their rights to appeal as follows:

a. The Defendant knowingly waives all right, pursuant to 28 U.S.C. g l29l or

any other statute or constitutional provision, to appeal the Defcndant's conviction on any ground
whatsoever. This includcs awaiverofall right to appeal the Defcndant's conviction on the ground
that the statute(s) to which the Defendant is pteading guilty is unconstitutional, or on the ground
that the admitted conduct docs not falt within the scope ofthc statutc(s), to thc cxtcnt that such
challcnges legally can bc waivcd.

b. The Dcfendant and this Office knowingly and exprcssly waive all rights
conferred by l8 U.s.c. $ 3742 to appeal whatever sentence is imposed (including any term of
imprisonment, fine, term of supervised release, or order ofrestitution) for any reason (including
the establishment of the advisory sentencing guidelines range, the determination of the
Defendant's criminal history, thc weighing of the sentencing factors, and any constitutional
challenges to the calculation and imposition ofany term of imprisonment, fine, order offorfeiture,
order ofrestitution, and term or condition ofsupervised release), except as follows:

The Defendant reserves the right to appeal any scntence that exceeds
lhe statutory maximum; and

ll. This Officc reserves the right to appeal any scntence below a
statutory minimum.

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c. The Defendant waives any and all rights under the Freedom of Information
Act relating to the investigation and prosecution ofthe above-captioned matter and agrees not to
file any request for documents from this Office or any investigating agency.

Restitution

11. The Defendant agrees to the entry of a Restitution Order for the full amount of the
victim's loss of $ 19,300,757 due and payable at the time of sentencing. The defendant shatl make
a bona fide effort to pay restitution in full as soon as practicable as determined by the Court and
United States Probation. The Defendant agrees that, pursuant to l8 U. S.C. gg 3663 and 36634 and
$$ 3563(bX2) and 3583(d), the Court may order restitution ofthe full amount ofthe actual, total
loss caused by the offense conduct set forth in the factual stipulation. The Defendant shall be
personally, jointly, and severally liable with any codefe
trCou.t also orders to pay ,./
restitution for the full amount of the victim's loss, inclu Anthony Urcioliffr C
Sr. The Defendant furthcr agrees that he will fully di s c -officer and to the
ation"d
Court, subject to the penalty of perjury, all information, including but not limited to copies of all
relevant bank and financial records, regarding the current location and prior disposition ofall funds
obtained as a result of the criminal conduct set forth in the factual stipulation. The Defendant
further agrees to take all reasonable steps to retrieve or repatriate any such funds and to make them
available for restitution. If the Defendant does not fulfill this provision, it will be considered a
material breach of this plea agreement, and this Office may seek to be relieved of its obligations
under this agreement.

Forfciturc

12. The Defendant understands that the Court will enter an Order of Forfeiture as part
ofthe Defendant's sentence, and that the Order of Forfeiture may include assets directly traceable
to the offense(s), substitute assets, and./or a money judgment equal to the value of the property
derived from, or otherwise involved in, the offenses. More spccifically, as part of the Order of
Forfeiture, the Defendant agrees to tho entry of a money judgment in the amount of 92,038,997,
which represents the amount ofillegal proceeds hc received Iiom the wire fraud scheme.

13. The Defendant agrees to consent to thc entry oforders of forfciture for the property
and waives thc requirements of Federal Rules of Criminal Proccdurc 1l(b)(lXJ), 32.2, and 43(a)
regarding notice ofthe forfeiture in thc charging instrument, advicc regarding forfeiture during the
change of plea hearing, announcement of the forfciture at sentencing, and incorporation of the
forfeihre in the judgment. In accordance with Fedcral Rule of Criminal Procedure 32.2(b)(4)(A),
the Defendant agrees that any Order of Forfeiture will become final as to him when the Court
enters it. The parties acknowledge any Order of Forfeiture imposing a money judgmcnt is
enforceable against the Defendant only.

14. The Defendant agrees to assist fully in the forfeiturc ofthe above property. The
Defendant agrees to disclose all assets and sources of income, to consent to all requests for access
to information related to assets and income, and to takc all steps nccessary to pass clear titlc to the
forfeited assets to the Unitcd States, including executing all documents necessary to transfcr such
title, assisting in bringing any assets located outside ofthe United States within thejurisdiction of

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the United States, and taking whatever steps are necessary to ensure that assets subject to forfeiture
are made available for forfeiture.

15. The Defendant waives all challenges to any forfeiture carried out in accordance
with this Agreement on any grounds, including any and all constitutional, legal, equitable,
statutory, or administrative grounds brought by any means, including through direct appeal, habeas
corpus petition, or civil complaint. The Defendant will not challenge or seek review of any civil
or administrative forfeiture of any property subject to forfeiture under this Agreement and will not
assist any third party with any challenge or review or any petition for remission of forfeiture.

Tax Liabilitv

16. The Defendant understands that this Agreement does not resolve any civil tax
liability that the Defendant may have, and that this Agreement is with the United States Attorney's
Office, not with the Internal Revenue Service. The Internal Rcvenuc Service is not a party to this
Agreement and remains liee to pursue any and all lawful remedies it may have. The Defendant
agrees, however, as a special condition of supervised release: (a) to exccutc a final and conclusive
"closing Agreement" with the Intemal Revenue Service, pursuant to scction 7121 of the lntemal
Revenue Code, in order to resolve tax liabilities for the years 2014 through 2020; (b) to provide a
complete and accurate financial statement, under penalty ofperjury, to the United states that shall
identi! all assets valued at $1,000 or more owned or held directly or indirectly by the Defendant,
as well as all such assets transferred by the Defendant to any third parties since 2013, including
the location ofsaid assets and identities ofthe third parties; and (c) to pay to the Intemal Revenue
Service alI additional taxes, interest and penalties that the Intemal Revenue Service may determine
that the Defendant owes for the tax years 2014 through 2020, pursuant to the aforesaid closing
Agrecment. The Defendant understands that a failure to comply with any of the conditions of the
Defendant's supervised release may result in revocation of the Defendant's release conditions,
resulting in the Defendant's reincarceration for alI or part ofthe term ofsupervised release.

Def'endant's Conduct Prior to Scntencin g and Brcach

ll. Bctwecn now and the date of the sentcncing, thc Dcfbndant will not engagc in
conduct that constitutcs obstruction ofjustice undcr U.s.s.G. $ 3c I .l ; will not violatc any fcderal,
state, or local law; will acknowledge guilt to the probation officcr and the court; will be truthful
in any statcmcnt to thc Court, this Office, law enforcemcnt agcnts, and probation officers; will
cooperate in thc proparation of the presentence r€port; and will not movc to withdraw from the
plea of guilty or from this Agreement.

18. If the Defendant engages in conduct prior to scntcncing that violates the above
paragraph of this Agrcement, and the court finds a violation by a preponderance ofthe evidence,
then: (i) this office will be fiec from its obligations under this Agreement; (ii) this oflice may
make sentencing arguments and recommendations different from thosc set out in this Agrecment,
even if the Agreement was reached pursuant to Rule 1l(c)(1)(c); and (iii) in any criminal or civil
proceeding, this office will be free to use against the Defendant all statements made by the
Defendant and any of the information or materials provided by the Defendant, including
statements, information, and materials provided pursuant to this Agrecment, and statements made
during proceedings before the court pursuant to Rule I I of the Federal Rules of criminal

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Procedure. A determination that this Oflice is released from its obligations under this Agreement
will not permit the Defendant to withdraw the guilty plea. The Defendant acknowledges that the
Defendant may not withdraw the Defendant's guilty plea-- cven if made pursuant to Rule
l1(c)(l)(C)-if the Court finds that the Defendant breached the Agreement. In that event, neither
the Court nor the Govemment will be bound by the specific sentence or sentencing range agreed
and stipulated to herein pursuant to Rule I 1(c)(1)(C).

Court Not a ParW

19. The Court is not a party to this Agreement. The sentence to be imposed is within
the sole discretion of the Court. The Court is not bound by the Sentencing Guidelines stipulation
in this Agreement. The Court will determine the facts relevant to sentencing. The Court is not
required to accept any recommendation or stipulation of the parties. The Court has the power to
impose a sentence up to the maximum penalty allowed by law. If the Court makes sentencing
findings different fiom those stipulated in this Agreement, or ifthe Court imposes any sentence up
to the maximum allowed by statute, the Defendant will remain bound to fulfill all of the obligations
under this Agreement. Neither the prosecutor, defense counsel, nor the Court can make a binding
prediction, promise, or representation as to what guidelines range or sentence the Defendant will
receive. The Defendant agrees that no one has made such a binding prediction or promise.

Entire ent

20. This letter, togcther with the Sealed Supplemcnt, constitutes the complete plea
agrcement in this case. This lctter, together with the Sealed Supplement, supersedes any prior
understandings, promises, or conditions between this Office and the Defendant. There are no other
agreements, promises, undertakings, or understandings between the Defendant and this Officc
other than those set forth in this letter and the Sealed Supplement. No changes to this Agreement
will be effective unless in writing, signed by all parties and approved by the Court.

Ifthc Defendant fully acccpts each and every term and condition ofthis Agreemcnt, plcasc
sign and have the Defcndant sign the original and retum it to mc promptly.

Very truly yours,

Erek L. Barron
United States Aftorney
Dlcib., ,1q*
,
,/ krm.rlft
," {L'l. tubh,ro,o' n,,,

Martin J. Clarke
Harry M. Gruber
Assistant United States Attomeys

I
 Case 1:21-cr-00342-LKG Document 68 Filed 04/20/22 Page 10 of 14

I have read this Agreement, including the Sealed Supprement, and carefulry reviewed
every
part of- it with my attomey. I understand it and I vol,ntar y agree to it. Specifically,
I have
reviewed the Factual and Advisory Guidelines Stipulation with my attorney, and
I do not wish to
change any part of it. I am completely satisfied with the representation of my attomey.

q 7-'
Date Elliott Dennis Kleinman

I am the Defendant's attorncy. I have carefully reviewed every part of this Agreement,
including the sealed Supplement with the Defcndant. The Defendant advises mJ that
the
Defendant understands and accepts its terms. To my knowledgc, the Defendant's
decision to enter
into this Agreement is an informed and voluntary one.

j,t. e r
Date Gerald C. Ruter, Esq.

t0
 Case 1:21-cr-00342-LKG Document 68 Filed 04/20/22 Page 11 of 14

Atta ment A
The Defendant stipulates and agrces that if this case had proceeded to triat, the
govcrnment would have proven the following facts beyond a reasonable doubt. The
Defendant also stipulates and agrees that the follorving facts do not cncompass all of the
evidence that would havc been prescnted had this matter proceeded to trial.

Count One - Consoira to Commit Wire Fraud

Elliott Kleinman, the defendant, was a longtime employee of a manufacturing company
called citrus and Allied Essences (hereinafter c&A). c&A is a family-owned global business
headquarteredin New York that formulates and produces oils and extracts used in the food
industry. c&A is affiliated with another company called rrilogy Essential Ingredients ("TEI"),
which produces flavoring ingredients and seasonings for the food industry. c&A has a
manufacturing facility in Belcamp, Maryland, and rEI has a manufacturing facility in Abingdon,
Maryland (hereina{Ier collectively referred to as c&A). Both facilities are in Harford county,
Maryland. c&A uses large plastic and metal drums to package and ship their flavors and oils.
C&A buys their drums from vendors located in various states.
ln or about 2012, Kleinman and another C&A employee, Eugene DiNoto, began to use
their management positions at c&A to execute a fraudulent billing scheme whereby they would
get illegal kickbacks from various drum vendors doing business with c&A. Kleinman and DiNoto
oversaw the purchasing and storing of drums on behalf of c&A for use at thc Harford county
manufacturing facilities. As the facility managers, they controlled which companies c&A
purchased drums from and how many. Thcy also had authority to review drum invoices and
authorize payments to the drum vendors.

One of the drum vendors interestcd in participating in the billing schcmc was Tunncl,
Bane[ & Drum Co, lnc. (hereinafter "TBD), located at 85 Triangle Boulevard, Carlstadt, New
Jersey. TBD was in the business of selling commercial drum containers, including new and
recycled steel, plastic, and fiber drums of varying sizes. Manufacturers like C&A use TBD,s
drums to store and transport products. Anthony P. Urcioli, Sr., is the owner and president ofrBD.
urcioli is also the owner and President of another drum supply company called Hartford Fibre
Drum, Inc. (hereinafter "Hartford"), located at the same address as TBD, which also did business
with C&A. Based on Kleinman's and DiNoto's conversations with Urcioli, TBD began supplying
reconditioned steel drums to C&A.
 Case 1:21-cr-00342-LKG Document 68 Filed 04/20/22 Page 12 of 14

soon after TBD became a drum supplier to c&A, Kleinman and DiNoto entered into
arrangement with Urcioli whereby TBD could continue selling drums to C&A if Urcioli
agreed to
fraudulently invoice c&A for more drums than TBD actually sold and delivered to the company.
If Urcioli agreed to falsifo its invoices in this way, DiNoto and Kleinman said that they and rBD
could split the extra money c&A paid rBD for the made-up drum deliveries. In other words,
DiNoto and Kleinman proposed a kickback scheme whereby they and TBD wourd split the
falsified portion of the invoice amount that c&A paid for undelivered drums. The split would be
50/50. DiNoto told Urcioli that DiNoto would split his share of the kickbacks with Elliot Kleinman
75/25. Urcioli agreed to participate in the false billing scheme.
Thereafter, between approximately January 2or2 untir January 31, 2020, DiNoto would
call Urcioli at least once a week, usually on Monday mornings, to discuss the number and type
of
drums that DiNoto actually wanted delivered to c&A's Maryland facilities. Based on that
information, Urcioli made arrangements to have TBD's trucks transport those drums to Mary[and.
Also, during those weekly phone calls, DiNoto would tell Urcioli how many additional drums to
put on TBD's invoice but not deliver to c&A. Urcioli would thon create a bogus invoice that
fraudulently billed C&A forboth delivered and undelivered drums. Later, the same billing scheme
was used with Urcioli's other company, Hartford.

Urcioli sent the false invoices to c&A's offices in Maryland where DiNoto approved them.
DiNoto then forwarded the false invoices to c&A's billing dcpartment in New york to be paid.
In addition, urcioli would create a handwritten purchase ordcr ticket that summarized the
breakdown of actual and bogus drum orders anrl how thc kickback amounts were calculated.
Urcioli would put a copy of the purchase order tioket in an envclope along with DiNoto,s and
Kleinman's sharc ofthe kickback amount payablc via checks frorn TBD and Hartford, and then
FedEx the envelope to their personal residences in Harford County, Maryland.

Sometimes the invoices were not written as DiNoto had instructed, and he would call
Urcioli and tell him to send him a corrected invoice or adjust the kickback amounts. On occasion,
DiNoto would correct an arithmetic mistake on urcioli's purchase ordcr ticket, take a photograph
ofthe changes he made to the ticket, and then email the corrccted ticket back to Urcioli.
when Urcioli originally agreed to the kickback scheme, hc totd DiNoto that he did not
want to pay DiNoto and Kleinman in cash. Instead, he wanted to pay them by check so the
payments would look like payments to drum wholesalers and be deductible as a cost ofgoods sold

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on TBD'S tax retums. In response to Urcioli's request, DiNoto told Urcioli to make his kickback
checks payable to a company linked to DiNoto called "sandpiper Enterprises." Kleinman advised

that he wanted his kickback checks payable to a company he formed called "EDK Management,
LTD." Urcioli agreed, and in addition to making the kickback checks drawn on TBD and Hartford

accounts payable to those two companies, Urcioli wrote the word "drums" on the checks to further

the pretense of legitimate purchases.

Between approximately Janvry 2012 and January 31,2020, based on his agreement with
Kleinman and DiNoto, Urcioli falsely invoiced C&A a total of $20,300,757. His companies kept
half that amount, and the other half was sent to DiNoto and Kleinman for them to split. Kleinman's

share of the kickbacks was approximately $2,307,121. During the 8-year conspiratorial period,
multiple interstate wires and mailings were madc to and from Maryland in furtherance of the
scheme to defraud C&A.

Count 'l'we ntv-()n c - Tax Iivasion

The TBD kickback checks that Kleinman received were made payable to his company,
EDK Management, Ltd (hereinafter "EDK"). Kleinman was the owner and sole shareholder of
EDK. The company's address was the same as Kleinman's residence. Kleinman opened and

maintained two commercial bank accounts for EDK at Harford Bank, one in the name of "EDK

Management Lrd, #XXXX4637, and the other in the namc of "EDK Management Ltd t/a Main
Street Cigars," #XXXX8l95. Main Sheet Cigars was a retail store located in Bel Air, Maryland.

Kleinman deposited the drum vendor's checks into EDK's business account #XXXX4637, where
it was withdrawn as cash, spent on personal expenscs, or transferrcd to the bank account for Main
Street Cigars.

For the period of 2017 through 2019, TBD paid Kleinman a total of approximately
$1,034,911 in kickbacks for his rolc in the fraudulent billing scheme. Kleinman's 2017 through
2019 income tax rctums frled with the IRS did not report those kickback payments as personal or
business income. The electronically filed Form 1040 tax rehrms for 2017 through 2019 bear the

electronic signature of Kleinman, and all were signed under the penalty of perjury.
More specifically, for the period ofJanuary 2018 through in or about April 2019, Kleinman

evaded and defeated the federal income ta.t he owed for calendar year 2018 by preparing and
causing to be prepared a false and fraudulent U.S. Individual Income Tax Return, Form 1040 that

he submitted to the Internal Revenue Service, in which he stated on line l0 that his taxable income
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 Case 1:21-cr-00342-LKG Document 68 Filed 04/20/22 Page 14 of 14

for that year was $166,223, and that the amount oftax due and owing on that amount as stated on
line 15 was the sum of $22,627. In truth and fact, Kleinman's taxable income for that year was
approximately $517,554, upon which there was an income tax due and owing of approximately
$92,026. In addition, to conceal the tax he owed on the kickbacks, Kleinman directed the checks
from the drum vendors to be made payable to EDK Management, LTD, and he deposited those
checks into a commercial bank account opened and maintained in the name of EDK Management,

LTD, all with the intent to create the false appearance that EDK Management LTD had a legitimate
business relationship with TBD.

In total, for tax years 2017 through 2019, Kleinman willfully evaded the assessment of
approximately $291,143 in federal income taxes on the vendor kickbacks he failed to disclose as
income to the IRS.

I have read this Statement of Facts and carefully reviewed every part of it with my attomey.

I understand it, and I voluntarily agree to it. I do not wish to change any part of it.
).\. ZL
Datc Ellioll Dennis Kleinman

I am Mr. Kleinman's attorney. I have carcfully reviewed every part of this Statement of
Facts with him. To my knowledge, his decisi to sign it i d and voluntary onc.

3.1. a->
Datc Gerald Ruter, Esq.