Originally posted by cdtm
https://www.justice.gov/usao-sdin/pr/former-health-care-chief-executive-sentenced-95-years-federal-prisonI hope this ******* dies in prison.
This type of ploy always seems great on paper but it's a terrible idea.
The only way this works is if every single person in the chain is 100% on board and no one has a chance of leaking due to pressure or changing circumstances.
The shell companies invoicing for fake services is a great idea. Where he went wrong is he needed those shell companies to provide legit services at marginally higher rates than industry average and then for those companies to find ways of cutting costs.
In other words, a company that is fairly close to legit but far enough away that he can skim some off the top. If done correctly, they really are fully legit businesses providing legit services. You just so happen to charge more than normal for those services.
It works like this:
You provide $50 million in services. However, you invoice for $65 million. You funnel $15 million of it and while having your "shell" companies do the services, their actual operating costs should be significantly less than $50 million without dropping too low in quality to be beyond reproach.
And the final piece is to obfuscate your relationship with the shell company enough that you don't get caught funneling. This is fairly standard practice.
"But isn't he just providing legit services at that point and there's nothing illegal going on?'
Almost. The final step is the illegal part. And the "using your own company for vendor services" may get him into trouble with state ethics requirements. For the second part, he can try and detach himself enough from that vendor to keep out of trouble with the ethics rules. It just seems like he did lots of elaborate scheming only to fail at accomplishing it at the fundamental level.