Friday, October 01, 2021

Co-owner of Mukilteo, Washington, commercial flooring business sentenced to prison for wire fraud

 Embezzled more than $1 million, victimizing business partner and financial institutions

Seattle – A 47-year-old Everett, Washington, man was sentenced today in U.S. District Court in Seattle to 2 years in prison for his embezzlement scheme that stole more than $1 million from a commercial flooring business he co-founded with a friend, announced Acting U.S. Attorney Tessa M. Gorman.  David M. Gluth, founded Gluth Commercial Flooring with a friend who put up $500,000 to start the company. Between 2011 and 2016, Gluth and a co-conspirator raided the company accounts to pay for everything from a home mortgage, to luxury vacations, to Nordstrom bills, and liquor purchases.  At the sentencing hearing U.S. District Judge Richard A. Jones told Gluth “You treated the victim like your personal ATM…. Your return on (your friend’s) investment was to orchestrate a significant and devastating fraud” upon the victim.

According to records filed in the case, Gluth conspired with company bookkeeper, Jodi Hamrick, to not only raid company funds, but to defraud financial institutions by taking out loans and obtaining credit lines without the knowledge or permission of the company’s co-owner.  The two used the company funds for a variety of personal expenses. The lies and deceit in this scheme involved forged signatures, forged documents, altered records, secret bank accounts, secret credit cards, false bookkeeping entries, and false statements in declarations and court filings.  The evidence in the case includes years of Skype instant messages between Gluth and Hamrick, showing the planning and execution of the fraud in minute detail.

Ultimately, the company co-owner had to go to court to try to get the truth about the embezzlement from the company.  And even as that litigation was underway, Gluth continued to hurt his one-time business partner by scheming to start a new flooring business and taking pending jobs and income with him.  Even after a King County Superior Court Judge barred the two from having anything to do with the company, they violated the order by attempting to modify a personal loan by placing it in the company name.

The flooring company went bankrupt in 2016, and the victimized business partner was left with nothing but debt.

Judge Jones noted that the damage to the victim was more than financial saying the victim “lost his ability to trust other people . . . that can never be restored . . . a breach of trust like that can’t be recovered.  That’s a permanent loss”

Gluth was charged in November 2020, and pleaded guilty in January 2021.  Gluth has agreed to a restitution figure of $325,000. 

The case was investigated by the FBI.  The case was prosecuted by Assistant United States Attorney Michael Dion and Special Assistant United States Attorney Jessica Ly.

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