State Comptroller Thomas P. DiNapoli and Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MICHAEL KLEIN, the former treasurer of the Mahopac Volunteer Fire Department ("MVFD”), was sentenced today by U.S. District Judge Cathy Seibel to 77 months in prison for wire fraud, subscription to false tax returns, obstruction of the grand jury, and false statement charges arising out of his embezzlement of more than $5.6 million from the MVFD.
State Comptroller Thomas P. DiNapoli said: "Michael Klein stole $5.7 million from the Mahopac VFD and community to buy yachts, jewels, and a Florida home while he was VFD treasurer. This contemptuous behavior and dereliction of duty has led him to the appropriate place: prison. He will also be ordered to make full restitution. I thank acting United States Attorney Kim, the FBI, IRS and the New York State Police for partnering with my office to bring this case to conclusion."
Acting U.S. Attorney Joon H. Kim said: "Michael Klein waged a 13-year campaign of theft and embezzlement from the volunteer fire department he was elected to serve. As he admitted at his plea, the one he served was himself, stealing funds from the department to buy himself boats, cars, and cruises. Then he lied about it on his taxes. Now, Michael Klein has been sentenced to a lengthy prison term for his crimes.”
According to documents filed in court:
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 his two businesses, Abbie Graphic Services, Ltd. ("Abbie Graphic”) and Buckshollow Emergency Equipment Corp. ("BEEC”). KLEIN then deposited the checks to bank accounts held by Abbie Graphic and BEEC. He entered these checks into the MVFD’s books as having been made payable to various vendors other than Abbie Graphic or BEEC that sold firefighting equipment or services used by fire departments. To satisfy the MVFD’s auditors, KLEIN prepared numerous false invoices to match the entries in the MVFD’s books.
KLEIN embezzled more than $5.6 million by writing more than 275 checks over a period of more than 13 years. He used the money to purchase, among other things, a 37-foot Thunderbird Formula boat; a 29-foot Everglades boat; a 55-foot Neptunus motor yacht named "K’Bam;” a second residence in Palm City, Florida; a 2010 Mercedes-Benz S550; a 2008 Jeep Liberty; and an antique fire truck. In January 2013, KLEIN went on what appears to be a Caribbean vacation and made $38,658.46 worth of jewelry and cruise purchases within two weeks. KLEIN also used the money he stole from the MVFD to support Abbie Graphic and BEEC.
KLEIN failed to report most of this income on his personal tax returns for the period from 2009 through 2014, thereby subscribing to false tax returns for each of those years.
Following law enforcement’s discovery of KLEIN’s embezzlement in September 2015, KLEIN obstructed the grand jury’s investigation of his conduct by making false statements regarding his finances and by concealing and dissipating assets. In September 2015, KLEIN concealed the proceeds he received from the sale of a Corvette by giving the money to a relative for deposit to her bank account and then arranging for the relative to pay his household bills. KLEIN also concealed an antique fire truck to prevent law enforcement from seizing it; sold a 2012 Victory motorcycle, converting the proceeds to cash; and transferred $58,000 to his mother as purported repayment of a college loan. In April 2016, KLEIN sold K’Bam, which he had purchased for $260,000 in 2012, for $136,850.46. In May 2016, KLEIN gave the United States Attorney a financial statement in which he falsely claimed, among other things, that BEEC had a delinquent loan of $275,000, and that, as a result of that loan, a lien was filed against KLEIN’s Florida property.
On March 7, 2017, KLEIN pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison; six counts of subscribing to false tax returns, each of which carries a maximum sentence of three years in prison; one count of obstructing the grand jury’s investigation, which carries a maximum sentence of 20 years in prison; and one count of making false statements to the United States Attorney, which carries a maximum sentence of five years in prison.
In addition to the prison sentence, KLEIN, 49, of Mahopac, New York, and Palm City, Florida, was sentenced to 77 years of supervised release. Judge Seibel also ordered KLEIN to forfeit $5,675,360.49 in ill-gotten gains, as well as various assets, including his residence in Palm City, Florida. Judge Seibel also ordered KLEIN to pay $5,675,360.49 in restitution.
Mr. Kim praised the outstanding investigative work of the IRS, FBI, New York State Comptroller, and New York State Police. 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 Attorneys Olga Zverovich, James McMahon, Andrew Dember, Maurene Comey, Michael Maimin, and Lauren Schorr are in charge of the prosecution.
Comptroller DiNapoli’s investigation was handled by his Division of Investigations.
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.
For access to state and local government spending, public authority financial data and information on 130,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.