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For Immediate Release:  
For Further Information Contact:
April 20, 2005

Office of The Attorney General
- Peter C. Harvey, Attorney General
Division of Criminal Justice
- Vaughn L. McKoy, Director

 

John R. Hagerty
609-984-1936

 

Division of Criminal Justice Targets Million Dollar “Bust-Out” Scheme and Financial Crime

TRENTON -Attorney General Peter C. Harvey and Vaughn L. McKoy, Director, Division of Criminal Justice, announced that the Division of Criminal Justice has charged a New York/New Jersey businessman, his wife, and an associate with concocting a classic “bust out” scheme that defrauded wholesale vendors marketing computer systems and equipment out of at least two million dollars in credit, cash, and merchandise.

Attorney General Harvey noted that the Division of Criminal Justice - Major Financial Crimes Bureau is targeting financial crime through the investigation and prosecution of business-related scams, including business, mortgage, real estate, investment, and securities fraud, predatory lending practices, government contract fraud, and other crimes that impact New Jersey’s corporate citizens, residents, consumers, government agencies, and economy.

According to Criminal Justice Director McKoy, a five-count State Grand Jury indictment charged George Liu, 60, 7002 Boulevard East, Guttenberg, Hudson County, his wife, Margaret Song, aka Yumei Song, 48, and Hilton Gbolie, 49, Loxahatchee, FL, with first degree criminal conspiracy and money laundering, theft by deception (2nd degree), and misconduct by corporate officials (2nd degree). If convicted on all charges, the defendants face more than 20 years in state prison and fines exceeding $800,000.

The State Grand Jury indictment alleges that from December, 1998 through July, 2001, the defendants established Gayer Computer Corporation (GCC), 600 Meadowlands Parkway, Secaucus, Hudson County, as a national wholesale re-seller and distributor of IBM clone computers, components and peripherals.

The indictment charges that the defendants used the corporation as a “bust out” operation by knowingly submitting false information on credit applications to Dunn & Bradstreet and other credit-monitoring institutions, including fraudulent financial statements and false company information. Based on the false financial information, vendors extended lines of credit to GCC, selling tens-of-thousands of dollars in computer equipment to the company on credit. While GCC made minimal payments to the vendors to induce the shipment of future and larger amounts of computer equipment, it is charged that all payments eventually stopped. The indictment further alleges that GCC re-sold the fraudulently obtained computer systems and equipment for large profits. The profits were, in turn, used to repeat the cycle of obtaining lines of credit from vendors, paying for initial shipments of equipment in order to obtain larger shipments, and then eventually defaulting on payment to the vendors and declaring bankruptcy.

The investigation by the Division of Criminal Justice - Major Financial Crimes Bureau determined that Liu, the owner of numerous New York City businesses, including a night club, a Chinese furniture and jade importing company, and at least two New York-based computer resale companies, enlisted a business associate to incorporate GCC in New York and New Jersey in 1998 and 1999. Gbolie, who had extensive experience in the computer industry, was responsible for GCC’s day-to-day operations. Song, Liu’s wife, was employed as the GCC bookkeeper. The Major Financial Crimes Bureau has identified eight corporate victims of the alleged scheme:

  • Bell Microproducts, with a financial loss of $122,538;
  • Soyo Tek, Inc., with a financial loss of $95,745;
  • Daewoo Electronics, with a financial loss of $48,984;
  • Cambridge Computer, with a financial loss of $23,500;
  • LG Electric, with a financial loss of $54,023;
  • Ingram, Inc., with a financial loss of $399,609;
  • SED International, with a financial loss of $86.101;
  • Techworks, Inc., with a financial loss of $888,770.

“The indictment alleges that the defendants established a dummy corporation with the intention of defrauding legitimate vendors in order to pocket significant profits and to finance personal expenses. The Division of Criminal Justice and the Major Financial Crimes Bureau is targeting unscrupulous businessmen who endeavor to defraud the marketplace and who, by their actions, jeopardize corporate and economic security,” Director McKoy said.

The State Grand Jury indictment was handed-up to Mercer County Superior Court Judge Linda R. Feinberg on April 15. The defendants will be scheduled to appear in Hudson County Superior Court for arraignment and bail. The investigation was coordinated by Supervising Deputy Attorney General Terrence Hull and State Investigator Robert Walker of the Division of Criminal Justice - Major Financial Crimes Bureau. The Federal Bureau of Investigation, Newark Office, initiated the investigation.

The Division of Criminal Justice - Financial Crimes Bureau encourages anyone who has information about any type of financial crime, or who believe they are a victim of a financial crime, to contact the Division of Criminal Justice Crime TipLine at 1-866-TIPS-4CJ (1-866-847-7425). Additional information, including a copy of the State Grand Jury indictment, is available by logging on to the Division of Criminal Justice Web site at www.njdcj.org.

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