Preet Bharara, the United States Attorney for the Southern District of New York, Thomas P. DiNapoli, New York State Comptroller, Shantelle P. Kitchen, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service - Criminal Investigation (“IRS-CI”), Diego Rodriguez, the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), and George Beach, Superintendent, New York State Police today announced the arrest of MICHAEL KLEIN, the former treasurer of the Mahopac Volunteer Fire Department (“MVFD”), on charges of wire fraud and subscribing to false tax returns.
Manhattan U.S. Attorney Preet Bharara stated: “Michael Klein repaid the trust his fellow volunteer firefighters placed in him by allegedly stealing $5.7 million of their money over a period of more than 13 years as their elected treasurer. As alleged, Klein lavished the embezzled money on himself, buying yachts, jewelry, and a second home in Florida, and then failed to report any of it on his tax returns. Public corruption victimizes the public generally, but here, the people of Mahopac and its volunteer firefighters have suffered specifically and directly, having lost almost $6 million that could have been used for good, but instead was allegedly squandered away by Klein. ”
New York State Comptroller Thomas P. DiNapoli said: “Mr. Klein allegedly stole nearly six million dollars from the Mahopac Volunteer Fire Department. Rather than protecting his neighbors as he pledged, they paid the price for his alleged thievery. I thank United States Attorney Preet Bharara, the Federal Bureau of Investigation, the New York State Police, and the Internal Revenue Service for their work with my office to bring Mr. Klein to justice.”
IRS Special Agent in Charge Shantelle P. Kitchen said: “Criminal tax investigations are often intertwined with investigations of alleged thefts by individuals entrusted with the stewardship of an organization’s assets. Individuals who have access to an organization’s bank accounts, books and records, and financial resources should seriously consider all of the consequences if they are inclined to embezzle. In addition to charges relating to the underlying financial theft, embezzlers expose themselves to federal criminal tax charges when they willfully fail to declare the proceeds of the thefts on their tax returns.”
FBI Assistant Director in Charge Diego Rodriguez said: “The subject of this investigation spent more than a decade living life in high style, while his fellow firefighters were busy volunteering their time to save people’s homes and lives. He allegedly embezzled millions of dollars in money that could have gone to help the firefighters in his department do their jobs. The FBI and our law enforcement partners won’t allow this type of greed to overshadow the great service the men and women on this volunteer fire department do each and every day they show up for work.”
New York State Police Superintendent George Beach said: “I commend the work performed on this case by our investigators from Troop K, the State Comptroller’s Office, and our federal partners. Our investigation revealed that this individual took millions of dollars meant to support the community’s fire department, and instead used it for his own personal gain. We will have no tolerance for those who abuse their position.”
Michael Klein was first elected treasurer of the MVFD in 2001. From in or about January 2002 to in or about September 2015, Klein embezzled MVFD funds under his control by writing checks to the two businesses he owned, Abbie Graphic Services, Ltd. (“Abbie Graphic”) and Buckshollow Emergency Equipment Corp. (“BEEC”). Klein then deposited the checks to bank accounts held by Abbie Graphics or BEEC. He entered these checks into the MVFD’s books as having been made payable to various vendors, other than Abbie Graphics or BEEC, that sold firefighting equipment or services used by fire departments.
Klein embezzled more than $5.7 million by writing more than 275 checks over a period of more than 13 years. He used the money to purchase, among other things, yachts, including a 55-foot Neptunus motor yacht named “K’Bam;” a second residence in Palm City, Florida; and jewelry. He also used the money to support Abbie Graphic and BEEC. Klein also failed to report any of this income on his personal tax returns for the period from 2009 through 2014, thereby subscribing to false tax returns for each of these years.
Following the discovery by law enforcement in the fall of 2015 of Klein’s embezzlement, Klein offered K’Bam for sale with a yacht broker in Florida for $229,000. He rejected an offer he received of $175,000 but sold K’Bam to an automobile dealer for the $136,850 he owed on a loan secured by K’Bam. The dealer is now offering K’Bam for sale for $260,000.
KLEIN, 48, of Mahopac, New York, and Palm City, Florida, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and six counts of subscribing to false tax returns, each of which carries a maximum sentence of three years in prison.
Mr. Bharara praised the outstanding investigative work of the IRS, FBI, New York State Police, and New York State Comptroller. He thanked the Putnam County District Attorney’s Office for its assistance in the investigation.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney James McMahon is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at [email protected], or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236. Review prior cases at http://www.osc.state.ny.us/investigations.
* As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.