Owners Of Hudson County, New Jersey, Scrap Metal Company Charged With 17-Year Conspiracy To Defraud Customers
Former Chief Financial Officer Has Pleaded Guilty to Related Charge
NEWARK, N.J. – The owners of Cinelli Iron & Metal Co. (CIMCO) were arrested today and charged with operating a 17-year conspiracy that defrauded customers out of millions of dollars, Acting U.S. Attorney William E. Fitzpatrick announced.
Craig Cinelli, 47, of Allendale, New Jersey, and his brother, Joseph Cinelli Sr., 61, of Montvale, New Jersey, are charged by indictment with one count of conspiracy to commit wire fraud and five counts of wire fraud. They were arrested this morning and are expected to appear this afternoon before U.S. Magistrate Cathy L. Waldor in Newark federal court.
David Barteck, 53, of Wood Ridge, New Jersey, the former chief financial officer of CIMCO, pleaded guilty on July 26, 2017 before U.S. District Judge Susan D. Wigenton to an information charging him with one count of conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court:
CIMCO, which was headquartered in Secaucus, New Jersey, purchased scrap metal for resale and operated three scrap metal recycling facilities in New Jersey. CIMCO trucks would deliver scrap metal containers to customer jobsites and remove them after they were filled. CIMCO then purportedly paid customers based on the type and net weight of the scrap material.
From 1999 through March of 2016, Craig Cinelli, Joseph Cinelli Sr., Barteck and others allegedly used a variety of fraudulent business practices to buy scrap metal from CIMCO’s customers for less than CIMCO should have paid. The company then resold the scrap metal at a profit.
Instead of paying the proper, agreed-upon amounts for the actual weight, members of the conspiracy used a variety of techniques to misrepresent the true weight and type of the scrap metal, including altering documents to reflect a lower weight, removing scrap metal from a haul before it was weighed and misrepresenting the types of scrap metal contained in a haul.
The wire fraud conspiracy and substantive wire fraud counts each carry a maximum potential penalty of up to 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
During his plea hearing, Barteck admitted that the loss caused by the conspiracy that was reasonably foreseeable to him was more than $9.5 million, but less than $25 million. His sentencing is scheduled for Oct. 30, 2017.
The charges and allegations contained in the indictment are merely accusations, and Craig Cinelli and Joseph Cinelli Sr. are presumed innocent unless and until proven guilty.
Acting U.S. Attorney Fitzpatrick credited special agents with the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael Mikulka in New York; special agents with the U.S. Department of Transportation, Office of Inspector General, under the direction of Special Agent in Charge Douglas Shoemaker in New York; and special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation.
The government is represented by Assistant U.S. Attorney Daniel Shapiro of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case is part of efforts underway by the Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Craig Cinelli: Ray Flood, Esq., Hackensack, New Jersey
Joseph Cinelli Sr.: Jonathan Goldstein, Esq., Newark, New Jersey
David Barteck: John J. Bruno Jr. Esq. and John F. Latoracca Esq., Rutherford, New Jersey