|TRENTON – Acting Attorney General John J. Hoffman announced that a Newtown, Pa., man pleaded guilty today to first-degree money laundering in connection with an investigation that revealed that he stole more than $2.3 million from two Burlington Township manufacturing companies owned by his wife’s extended family while serving as CEO of the companies.
The former CEO, Michael Geiger, 52, of Newtown, Pa., pleaded guilty to first-degree money laundering before Superior Court Judge Charles A. Delehey in Burlington County. Under the plea agreement, the state will recommend that he be sentenced to 12 years in state prison, including four years of parole ineligibility. He must pay restitution to the companies and will be ordered to pay a $250,000 anti-money laundering penalty to the state.
Deputy Attorney General Valerie A. Noto took the guilty plea for the Division of Criminal Justice Specialized Crimes Bureau. Judge Delehey scheduled sentencing for Geiger for Oct. 10.
Geiger was CEO of American Casein Company (“AMCO”) and American Custom Drying Company (“ACD”) from 2004, when he was hired by the late founder of the companies, his wife’s grandfather, until 2009, when he was removed after stockholders discovered suspicious expenditures. He was indicted on Sept. 21, 2011, along with his wife, Donna Geiger, 50, who was charged with conspiring with him in connection with some of the thefts. The state has agreed, in connection with his plea, not to oppose her application to the Pre-Trial Intervention Program.
“Instead of applying his energy and skills to advance the interests of these companies and their shareholders, this former CEO abused his position of trust to embezzle millions of dollars, which he then used to bankroll personal luxuries such as a Porsche and two vacation homes,” said Acting Attorney General Hoffman. “His greed is landing him exactly where he belongs – in prison.”
“Geiger is a thief, and that doesn’t change because he wore a suit and stole from victims who were related to him by marriage,” said Director Elie Honig of the Division of Criminal Justice. “By aggressively prosecuting white collar criminals, we aim to deter fraud and protect investors and businesses in New Jersey.”
Another defendant previously pleaded guilty in the case. On Aug. 30, 2011, Hugh Henley, 67, of Delray Beach, Fla., pleaded guilty to second-degree money laundering before Superior Court Judge Pedro J. Jimenez Jr. in Mercer County. Henley was president of Prestige Technology Corporation of Boca Raton, Fla., a company that supplied products to AMCO and ACD. In pleading guilty, he admitted that he submitted false invoices to AMCO and ACD to help Geiger misappropriate funds. He is awaiting sentencing. The state will recommend that Henley be sentenced to seven years in state prison and be ordered to pay a $250,000 anti-money laundering penalty.
Deputy Attorney General Noto prosecuted the defendants, under the supervision of Supervising Deputy Attorney General Jill Mayer, who is Chief of the Specialized Crimes Bureau. The investigation was conducted and coordinated for the Division of Criminal Justice Specialized Crimes Bureau by retired Detective Gary O’Brien, Detective Lynn Patrick Fitzgerald and Deputy Attorney General Noto.
AMCO specializes in products made from casein, which is a milk and cheese protein used to make foods, plastics, adhesives, paints and other goods. AMCO manufactures powdered protein ingredients for foods, beverages, cosmetics and personal care products. It also manufactures protein polymers for technical applications. ACD provides spray drying, blending, packaging and re-bagging services for the chemical and food industries. The companies bought most of the casein products they used in their operations from Prestige Technology.
The investigation by the Division of Criminal Justice revealed that Michael Geiger stole the following amounts from AMCO and ACD through the schemes that are outlined. One scheme involved a dummy corporation he formed, DMG Automotive Inc. of Newtown, Pa., which also was charged in the indictment.
From 2005 through 2009, Michael Geiger stole a total of $398,849 from AMCO and ACD by means of 70 unauthorized company checks and wire transfers which were made payable to Michael Geiger, or, in one instance, Donna Geiger.
From 2006 through 2009, Michael Geiger had AMCO and ACD pay a total of approximately $334,734 in bills for work performed by nine different contractors or vendors at his home in Newtown, Pa., including, among other things, home renovations, concrete work, electrical upgrades, landscaping, tree work and housekeeping.
Between 2006 and 2009, Michael Geiger used $75,005 in additional unauthorized checks from AMCO and ACD to purchase four vehicles for himself: a Porsche, an MG, a GMC Yukon and a Volkswagon Jetta.
- In October 2008, at Michael Geiger’s direction, Henley generated four phony invoices from his company, Prestige Technology, each billing AMCO in the amount of $164,904. Although AMCO did not receive any products from Prestige for these invoices, Michael Geiger had AMCO pay all four invoices. An amount equal to the total of those invoices, $659,616, was subsequently wired by Henley from Prestige to the bank account of DMG Automotive in October 2008. The investigation revealed that Michael Geiger wanted to loan the money to his mother-in-law so that she could pay estate taxes on the estate of the founder of AMCO and ACD, which would help Geiger solidify his control of the companies.
Michael Geiger stole $221,186 from AMCO and ADC which he used to purchase a condominium in Fort Pierce, Florida, in October 2008. Michael Geiger directed Henley, through Prestige, to wire $221,186 to the title company in Florida that was handling the real estate closing. Michael Geiger executed a false promissory note for Henley for that amount. He reimbursed Henley by having him submit phony invoices from Prestige to AMCO and ADC, which were paid by the companies in January 2009, even though the companies did not receive any products for the invoices.
Similarly, the following year, in October 2009, Michael Geiger stole $192,113 from AMCO and ADC which he used to buy a vacation home in Cape May, N.J. As in the prior home purchase, Michael Geiger directed Henley to wire the funds from Prestige to the title company handling the closing. Michael Geiger executed a false promissory note for Henley, and he had Henley submit false invoices from Prestige to AMCO and ADC to obtain reimbursement. The invoices were paid in December 2009.
- In November 2009, a month before he was terminated as CEO, Michael Geiger had two checks issued to himself from AMCO and ACD for a total of $734,220 in severance pay. The maximum amount that Geiger was permitted to receive in severance pay from the two companies under his employment contract was $300,000 ($150,000 from each company). Geiger stole the remaining $434,220 in unauthorized severance pay.
In addition to the money laundering and thefts from AMCO and ACD, the indictment charged Michael Geiger with stealing $1.4 million in unemployment insurance benefits by directing employees to underreport their hours and wages in applications to the state Department of Labor so they could collect unemployment benefits. In November 2008, Geiger implemented a rolling layoff program in which employees were laid off for one week per month. From that time until his termination in December 2009, Geiger directed employees to supplement their wages by filing fraudulent unemployment applications, which resulted in them receiving about $1.4 million in benefits to which they were not entitled. After Geiger was fired, the two companies reached a financial settlement with the Department of Labor and Workforce Development to resolve the violations.