Eugene Andrew DiNoto, of Bel Air, pleaded guilty Tuesday to conspiracy to commit wire fraud, engaging in an illegal monetary transaction and filing a false tax return, in connection with a kickback scheme that defrauded his employer of more than $29 million, according to the Maryland U.S. Attorney’s Office.
According to the plea, DiNoto, 51, was a longtime employee of a family-owned global business headquartered in New York, but with manufacturing facilities in Belcamp and Abingdon. Beginning in 2012, DiNoto and another employee, Elliott Kleinman, 68, also of Bel Air, used their management positions with their employer to execute a fraudulent billing scheme and received illegal kickbacks from vendors doing business with the company.
According to the Maryland U.S. Attorney’s Office, DiNoto and Kleinman were the facility managers and oversaw the purchasing and storing of drums for use at the Harford County manufacturing facilities, which were used to store and transport products. They also had authority to review invoices and authorize payments to the drum vendors.
DiNoto and Kleinman entered into an arrangement with Anthony P. Urcioli Sr., the owner and president of two New Jersey drum suppliers, to falsify invoices and split the extra money from the made-up drum deliveries 50/50. DiNoto told Urcioli that he would split his share of the kickbacks with Kleinman 75/25. Urcioli agreed to participate in the false billing scheme, according to the Maryland U.S. Attorney’s Office.
The Maryland U.S. Attorney’s Office said that from approximately January 2012 to January 2020, DiNoto contacted Urcioli at least once a week to discuss the number and type of drums that he actually wanted delivered to the Harford County facilities and how many additional drums to charge for, but not deliver. After Urcioli created the fraudulent invoices, DiNoto approved the invoices and sent them to his employer’s headquarters to be paid.
Urcioli also created a handwritten purchase order ticket that summarized the breakdown of actual and bogus drum orders, and how the kickback amounts were calculated. Urcioli would put a copy of the purchase order ticket in an envelope along with DiNoto’s and Kleinman’s share of the kickback amount, paid with checks from his drum supply companies, and then send the envelopes to their personal residences in Bel Air, authorities said.
According to the Maryland U.S. Attorney’s Office, when DiNoto would correct an arithmetic mistake on Urcioli’s purchase order ticket, DiNoto would take a photograph of the changes he made to the ticket and email the corrected ticket back to Urcioli.
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Urcioli paid the kickbacks to DiNoto and Kleinman by check so the payments would look like payments to drum wholesalers and be deductible as a cost of goods sold on one of his companies’ tax returns. DiNoto and Kleinman formed individual companies and set up commercial bank accounts to deposit Urcioli’s checks. From there, they transferred the money to their personal accounts, authorities said.
Between January 2012 and Jan. 31, 2020, Urcioli falsely invoiced DiNoto’s employer a total of $20,300,757, the Maryland U.S. Attorney’s office said. Urcioli’s companies kept half that amount, while the remaining funds were sent to DiNoto and Kleinman. DiNoto’s share of the kickbacks was approximately $7,071,106.
The Maryland U.S. Attorney’s Office also said that over the same eight-year period, DiNoto used other drum vendors beside Urcioli’s companies to defraud his employer. DiNoto submitted and approved invoices from other vendors totaling approximately $9,197,181, resulting in a total loss to his employer of approximately $29.5 million.
From 2017 through 2019, none of the kickback money DiNoto received in the scheme was reported as income on the tax returns he filed with the IRS, resulting in a loss to the U.S. government of approximately $1.375 million, according to the Maryland U.S. Attorney’s Office.
DiNoto faces a maximum sentence of 20 years in prison for conspiracy to commit wire fraud; a maximum of 10 years for engaging in an illegal monetary transaction; and a maximum of five years for filing a false tax return. Sentencing is scheduled for DiNoto in U.S. District Court in Baltimore on July 13 at 2 p.m.
DiNoto’s guilty plea was announced by Maryland U.S. Attorney Erek L. Barron, Special Agent in Charge Thomas J. Sobocinski of the FBI, Baltimore Field Office, and Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service — Criminal Investigation, Washington, D.C., Field Office.
Kleinman and Urcioli, 78, of Park Ridge, New Jersey, previously pleaded guilty to their roles in the scheme and are awaiting sentencing.