Two Accounting Department Employees Also Charged With Participating In the Scheme
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging LOUIS LLUBERES, a/k/a “Luis Lluberes,” MOISES LLUBERES, MARIA AGUILAR, a/k/a “Maria Hewitt,” and MARIA LOPEZ with conspiracy to commit wire and bank fraud, wire fraud, bank fraud, and conspiracy to commit money laundering stemming from their years-long scheme to fraudulently boost the revenues of their temporary staffing company (“Company-1”) and launder funds through a series of shell companies before mischaracterizing the money as collections from customers. The scheme allowed Company-1 to fraudulently obtain more than $500 million on its line of credit from a U.S. bank (“Bank-1”) and supported the sale of Company-1 to a group of investors (the “Investor Group”) at a grossly inflated price. LOUIS LLUBERES, MOISES LLUBERES, AGUILAR, and LOPEZ were arrested this morning in the Middle District of Florida, and will be presented this afternoon in that district. The case is assigned to U.S. District Judge Vernon S. Broderick.
Acting U.S. Attorney Audrey Strauss said: “Louis Lluberes, founder and former CEO of a temporary staffing company, and his three co-defendants, allegedly schemed to inflate the company’s receivables, thereby making the company appear far more profitable than it was. As alleged, they were thus able to fraudulently exceed their bank’s credit limit, borrowing over $500 million, and ultimately sold the company at a vastly inflated price. Thanks to the assistance of the FBI, Lluberes and his co-defendants now face multiple federal fraud charges.”
FBI Assistant Director William F. Sweeney Jr. said: "Today's indictment details an alleged multimillion-dollar scheme in which the defendants fraudulently borrowed money from a major financial institution, funneled the money from a revolving line of credit through a series of shell companies, and dumped it back into the company, falsely representing those funds as business proceeds. They later manipulated the books by creating fraudulent invoices to boost the perceived value of the company before its sale to a private equity firm. These charges serve to remind everyone that illegal business dealings will be faced with intense scrutiny."
According to the Indictment unsealed today in Manhattan federal court:[1]
LOUIS LLUBERES founded Company-1 in 1995 and served as Company-1’s chief executive officer until March 2020. Company-1 served as a staffing company, supplying other businesses with temporary and permanent labor. MOISES LLUBERES, LOUIS LLUBERES’s brother, served as Company-1’s chief financial officer. AGUILAR, MOISES LLUBERES’s romantic partner, and LOPEZ, LOUIS LLUBERES’s daughter, served in Company-1’s accounting department.
Company-1 had established a revolving line of credit with Bank-1. Under the terms of the line of credit, Company-1 could only borrow up to a designated ratio of Company-1’s eligible accounts receivable (the “Borrowing Base”). By its terms, invoices that had gone more than 90 or 120 days without being paid were no longer eligible to be considered as part of Company-1’s Borrowing Base. Officials at Company-1, including MOISES LLUBERES and LOPEZ, were required to submit weekly financial reports to Bank-1, which included information on Company-1’s sales and collections, among other items, that allowed Bank-1 representatives to calculate Company-1’s Borrowing Base.
Beginning in or about 2017, after losing significant business from major clients, the defendants began creating fraudulent invoices (the “Fictitious Receivables”). The Fictitious Receivables, which were recorded on Company-1’s books, created the appearance that Company-1 was engaged in more business and would be receiving more client payments than was the reality. All told, the defendants created more than 2,000 Fictitious Receivables. LOPEZ was responsible for recording the vast majority of Fictitious Receivables onto Company-1’s books.
Thus, by inflating Company-1’s Borrowing Base through the creation of Fictitious Receivables, Company-1 and the defendants were able to borrow more than $520 million from Bank-1. Company-1 was not actually entitled to borrow these funds.
In order to perpetuate their fraud, the defendants utilized two shell companies (“Shell-1”) and (“Shell-2”) to launder Company-1 funds before transferring those funds back to Company-1 and mischaracterizing those funds as client collection payments.
Between in or about September 2017 and in or about March 2020, Company-1 accounts transferred approximately $120 million in funds obtained from Company-1’s line of credit with Bank-1 to Shell-1’s bank account. During the same time period, Shell-1 transferred approximately $119 million to Shell-2, constituting approximately 90% of all funds received by Shell-2. And, during the same time frame, Shell-2 transferred approximately $129 million to Company-1’s collections account, where the defendants disguised the funds as client payments on outstanding invoices.
Once the misappropriated funds had been returned to Company-1’s collections account, LOPEZ and others applied those funds against aging accounts receivable, including the Fictitious Receivables. This allowed Company-1 to maintain its Borrowing Base and continue borrowing from Bank-1.
Beginning in or about 2017, the Investor Group initiated negotiations to acquire Company-1, and the Investor Group executed an agreement to purchase Company-1 (the “Purchase Agreement”) in May 2018. In connection with the Purchase Agreement, LOUIS LLUBERES certified that financial records relied upon by the Investor Group and incorporated into the Purchase Agreement, including Company-1’s accounts receivable, were accurate and legitimate. In reality, as reviewed by forensic accountants retained by Company-1, these records included approximately $56 million in Fictitious Receivables, which resulted in the Investor Group overvaluing Company-1’s enterprise value by approximately 430%.
LOUIS LLUBERES was paid approximately $11.3 million on the day the Investor Group acquired Company-1. LOUIS LLUBERES also received an additional approximately $6.2 million based, in part, on fraudulent representations to the Investor Group and Company-1. In total, LOUIS LLUBERES made at least $17.5 million from the sale of Company-1 (the “Acquisition Payments”).
LOUIS LLUBERES transferred at least approximately $716,000 in the Acquisition Payments to MOISES LLUBERES and at least approximately $45,000 in the Acquisition Payments to LOPEZ. The defendants further used the Acquisition Payments to acquire homes in Florida, Punta Cana in the Dominican Republic, precious metals, and other personal items. LOUIS LLUBERES also transferred Acquisition Payments funds to a Tex-Mex restaurant operated by LOUIS LLUBERES and MOISES LLUBERES in the Dominican Republic.
In or about March 2020, Company-1 learned of LOUIS LLUBERES and MOISES LLUBERES’s fraud when an attorney retained by the brothers wrote a letter, dated March 30, 2020, disclosing “excessive billing” to Company-1’s customers in order to increase Company-1’s sales and allow Company-1 to draw more from its line of credit than Company-1 would otherwise be entitled to. AGUILAR closed Shell-2’s bank account the same day that the LLUBERES brothers’ attorney submitted the letter to Company-1. Company-1 fired the defendants after it was alerted to the fraudulent scheme.
LOUIS LLUBERES, 58, of Windermere, Florida; MOISES LLUBERES, 56, of Winter Grove, Florida; AGUILAR, 37, of Winter Grove, Florida; and LOPEZ, 37, of Orlando, Florida, are charged with (1) conspiring to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; (2) wire fraud, which carries a maximum sentence of 30 years in prison; (3) bank fraud, which carries a maximum sentence of 30 years in prison; and (4) conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss praised the investigative work of the FBI.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
