The owner of a Bel Air business admitted to federal tax evasion and conspiracy to commit wire fraud, officials say.
|Updated Wed, Apr 20, 2022 at 7:35 pm ET
BEL AIR, MD — A Bel Air man faces up to 25 years in prison after pleading guilty to tax evasion and conspiracy to commit wire fraud, according to prosecutors.
Elliott Dennis Kleinman, 68, of Bel Air, and a colleague in Harford County are accused of coming up with a kickback scheme that defrauded their employer of $20,300,757.
Kleinman worked as a manager for Citrus and Allied Essences (C&A), which uses large plastic and metal drums to ship and store extracts and oils for the food industry at its Belcamp facility and at its affiliate in Abingdon Trilogy Essential Ingredients, which makes seasonings and ingredients.
From 2012 to 2020, prosecutors said Kleinman admitted that he conspired with another manager who worked for his employer in Harford County as well as a drum supplier in New Jersey to buy drums each week and bill for more than the amount sent to the two facilities in Maryland.
In exchange for kickbacks, the owner and president of Tunnel, Barrel & Drum Co. in Carlstadt, N.J., agreed to fraudulently invoice C&A for more drums than it actually sold to the Harford County company, according to the plea agreement for Kleinman.
Find out what's happening in Bel Airwith free, real-time updates from Patch.
Over the eight-year period, the false invoices totaled $20,300,757, according to the agreement, about half of which went to the New Jersey man.
Kleinman saw more than $2.3 million, and prosecutors said he created a commercial bank account called EDK to stash his kickbacks, to make it appear he had a legitimate relationship with the drum supplier.
One account called EKD Management Ltd. was held at Harford Bank and the other was EDK Management Ltd. trading as Main Street Cigar, located in a shopping center on Churchville Road.
Officials said Kleinman deposited the drum vendor’s checks into EDK’s business account, then withdrew it as cash, which he spent on personal items or moved to the Main Street Cigar account.
The New Jersey drum supplier wrote out purchase orders summarizing the actual and fake drum orders showing how the kickbacks were calculated, and he sent copies to Kleinman's home and the personal residence of the other Harford County manager involved — Eugene DiNoto — through FedEx, according to the plea agreement. In weekly phone calls, DiNoto and the New Jersey business owner negotiated the number of real and bogus drums that would be shipped, and sometimes prosecutors said that DiNoto called to contest the kickback calculations.
From 2017 through 2019, Kleinman was paid about $1,034,911 in kickbacks for his role in the fraudulent billing scheme, and his failure to disclose the income in his tax returns resulted in a loss to the U.S. government of $291,143, prosecutors said.
From 2018 to April 2019 alone, officials said Kleinman reported making $166,223, so he owed $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," according to the plea agreement.
For tax evasion, Kleinman faces up to five years in federal prison, and for conspiracy to commit wire fraud, he faces up to 20 years in prison.
U.S. District Judge Lydia Kay Griggsby will handle sentencing, which has not yet been scheduled as of Wednesday.
The owner of Tunnel, Barrel & Drum Co. — Anthony P. Urcioli Sr., 78, of Park Ridge, N.J. — has already pleaded guilty to conspiracy to commit wire fraud and filing a false tax return for his role in the scheme, prosecutors said; he is also awaiting sentencing, officials said.
Below is Kleinman's plea agreement: