The United States Attorney for the
District of Connecticut announced that Dale K. Ciccarelli, 57, of Southbury,
was sentenced today Senior United States District Judge Alfred V. Covello in
Hartford to five months of imprisonment, followed by five months of home
confinement and one year of supervised release, for his role in a scheme by
principals of F&S Oil to defraud Citizens Bank of millions of dollars.
According to court documents and
statements made in court, Ciccarelli, a certified public accountant, served as
the external auditor for F&S Oil Company Inc. (“F&S Oil”), which was in
the business of providing heating oil to residential and commercial customers
in the Waterbury area.
As primarily a seasonal business with
fluctuating cash flow, F&S Oil needed access to a banking line of credit to
conduct its business on an ongoing basis. As a result, F&S Oil had a
banking relationship with RBS Citizens, NA (“Citizens Bank”), which included
three outstanding lines of credit or loans secured by the assets, inventory,
and receivables of F&S Oil. Citizens Bank would routinely extend funds to
F&S Oil under the existing line of credit based, in part, on information
provided by Christopher Carr, the president of F&S Oil, including F&S
Oil’s certified financial statements, and periodic submissions of borrowing
base certificates. The borrowing base certificates would itemize F&S Oil’s
total gross accounts receivable and would include a listing of the aging of the
receivables and a total fuel inventory. In or before August 2006, as F&S
Oil experienced cash flow problems, Carr falsified the accounts receivable
listed on the borrowing base certificates to support a $4.5 million line of
credit from Citizens Bank.
In summer 2006, Carr also falsified
F&S Oil’s financial statements, which fraudulently overstated assets and
liabilities, namely, the accounts receivable and unearned customer payments, in
order to support the false figures that had previously been provided to the
bank. At that time, when reconciling the financial statements with the detailed
F&S Oil books and records, Ciccarelli learned of the discrepancy between
the true receivables and those listed on the financial statements and the
borrowing base certificates previously provided to the bank. Carr instructed
Ciccarelli to adopt the false accounts receivable and unearned customer
payments in certifying the financial statements to support the false borrowing
base certificates.
On August 24, 2006, Ciccarelli falsely
certified the accuracy of F&S Oil’s financial statements for the fiscal
year ending March 31, 2006. F&S Oil provided the financial statements to
Citizens Bank, which continued to extend monies on a line of credit until
February 2008.
In August 2007, Ciccarelli again falsely
certified the accuracy of F&S Oil’s financial statements, which he knew
continued to misrepresent the relevant financial information from the 2006
certified financial statements.
Ciccarelli also has admitted that he
knew that Richard A. Stevens, the owner of F&S Oil, and other employees of
the company were using F&S Oil monies to pay non-deductible personal
expenses, as well as non-deductible wages for no-show employment of others.
Nonetheless, Ciccarelli prepared F&S Oil’s corporate federal tax returns,
deducting the above items as legitimate deductible business expenses.
Judge Covello ordered Ciccarelli to pay
restitution of $1.7 million to Citizens Bank.
On February 2, 2012, Ciccarelli pleaded
guilty to one count of conspiracy to commit bank fraud and one count of aiding
and assisting the filing of a false federal tax return.
On May 24, 2011, Carr pleaded guilty to
one count of bank fraud. He awaits sentencing.
On August 11, 2010, Stevens pleaded
guilty to one count of willfully filing a false U.S. tax return. On March 3,
2011, he was sentenced to five months of imprisonment, followed by five months
of home confinement.
This case has been investigated by the
Federal Bureau of Investigation and the Internal Revenue Service-Criminal
Investigation. The case is being prosecuted by Assistant U.S. Attorney
Christopher W. Schmeisser.
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