Five men indicted on 63 charges for $25 million Xerox fraud scheme
ROCHESTER, N.Y. (WHAM) - A federal grand jury handed down a 63-count indictment against five men accused of defrauding Xerox of $25 million.
Robert Lee Fisher, David Haynes, Kyle Haynes, Jason Haynes and Bryan Day are all accused of wire fraud, conspiracy to commit mail and wire fraud, and conspiracy to commit money laundering.
Prosecutors said all five live near Daytona Beach, Florida. They say the Hayneses and Day, who own Haynes Brother Furniture, set up a sham company called HDH Graphics in order to receive 63 Xerox printers from Fisher, an authorized reseller of Xerox equipment.
The suspects accused of running HDH allegedly made few prints with the Xerox equipment, but prosecutors say they fraudulently reported to Xerox the number of prints was higher. Most of the printers, prosecutors say, were never removed from their boxes. They say Xerox ended up shipping about $25 million in toner to the HDH suspects, and the suspects in turn allegedly sold the toner to an individual in Miami for $11 million and shared the profits with Fisher.
Customers who rent equipment from authorized resellers, such as Fisher, are required to order toner from Xerox and pay the company based on how many prints are made. They are not allowed to sell the toner.
The Hayneses and Day are also accused of making financial transactions in an effort to avoid paying federal income tax from what they received from selling the toner.
“While the program was designed to help Xerox customers by only having them pay for the materials they actually used, the defendants converted Xerox’s goodwill into their own windfall," said United State Attorney James Kennedy. "Such dishonest business practices—the cost of which is often borne by the consumer—will not be tolerated.”
“The reality is losses like these often get passed on to the consumer in the forms of higher prices, which is why we must hold the operators of these schemes accountable," said Kevin Kelly Special Agent in Charge of U.S. Immigration & Customs Enforcement, Homeland Security Investigations. "HSI special agents dedicated to uncovering financial fraud will continue to aggressively investigate those who seek to blatantly disregard the law for their own financial gain.”
ICE worked with Homeland Security and the IRS to make the arrests.
If convicted, each man faces up to 20 years in prison and a $250,000 fine.
All five are scheduled to be in federal court in Rochester on April 4 at 2 p.m..