ALM Properties, Inc.
Page printed from: http://www.law.com
Select 'Print' in your browser menu to print this document.
Kickback Probe IDs Former Home Depot ExecutivesU.S. Attorney moves to seize assets, but none of the ex-managers has been indicted in alleged scam
The U.S. Attorney in Atlanta has moved to seize nine properties, luxury cars and more than $300,000 in cash and investments owned by three former Home Depot executives under investigation in connection with an alleged international kickback scheme, according to records filed by prosecutors. The complaints provide the first detailed public look at the investigation, which became public last year when Home Depot acknowledged that it had fired four purchasing managers for violating the company's ethics policy.
Daily Report2008-03-04 12:00:00 AM
The U.S. Attorney in Atlanta has moved to seize nine properties, luxury cars and more than $300,000 in cash and investments owned by three former Home Depot executives under investigation in connection with an alleged international kickback scheme, according to records filed by prosecutors.
The civil forfeiture complaints provide the first detailed public look at the federal kickback investigation, which began in 2006 and became public last year when Home Depot acknowledged that it had fired four purchasing managers for violating the company's ethics policy.
Court records describe a two-year, ongoing investigation into suspected kickbacks, wire fraud, mail fraud and money laundering. The FBI, the criminal investigation division of the Internal Revenue Service and the U.S. Bureau of Alcohol, Tobacco and Firearms are involved in the investigation, according to court records, which also name the former executives at the heart of the federal probe.
"Persons of interest," according to the civil forfeiture complaint, include Anthony Tesvich, a 19-year Home Depot veteran and the company's former product development merchant; Tesvich's wife, Melissa; James P. Robinson, a former Home Depot divisional merchandising manager and nearly nine-year employee; and Ronald K. Johnston, a former Home Depot global product merchant who worked at the company for 16 years.
No indictments and no informations (criminal charges filed in lieu of an indictment) naming Tesvich, Robinson or Johnston have been filed in what civil court documents say is an ongoing criminal investigation.
Federal law gives federal prosecutors the right to seize properties that may be linked to a crime. Those properties are forfeited through a civil forfeiture claim brought by the U.S. Attorney against the properties rather than the property owners. Federal law does not require either a criminal conviction or a criminal charge against the property owner in order for the property to be forfeited.
Tesvich resigned from Home Depot in 2005 after he was questioned by company security officials about evidence they had obtained that suggested he had accepted kickbacks from one of Home Depot's flooring suppliers in Taiwan in return for vending contracts, according to a federal complaint. At that time, Tesvich said that he had been receiving $4,900 a month from the Taiwanese firm for the lease of warehouse space, the complaint stated.
Robinson and Johnston, who both left Home Depot's employ in July 2007, are being investigated for taking hundreds of thousands of dollars in payments from Tesvich and his companies -- after Tesvich's resignation -- on behalf of foreign vendors seeking business with Home Depot, according to the federal forfeiture complaints.
Federal prosecutors are seeking to seize luxury cars; nine properties, including resort properties in Hot Springs, Calif., Alabama and Tennessee; more than $135,000 in investment account deposits; more than $100,000 in home improvements; and $146,000 in cash that Tesvich, Robinson or Johnston allegedly acquired with kickbacks from Home Depot vendors.
Johnston's attorneys, Paul S. Kish and W. Carl Leitz III of Kish & Leitz in Atlanta, last month secured a consent order from U.S. District Judge Beverly B. Martin to stay civil forfeiture proceedings on Johnston's properties "pending the outcome of a criminal investigation of this matter, which is now being conducted in the northern district of Georgia" and is related to the forfeiture actions.
In a separate, but related, forfeiture action, Tesvich's wife, Melissa, secured an order from Martin staying forfeiture of two properties associated with a federal investigation of both her husband and herself.
According to court defense pleadings, federal prosecutors have indicated they intended to question her concerning "an obvious and significant criminal investigation" stemming from her husband's Home Depot employment and that she intended to invoke her constitutional Fifth Amendment right against self-incrimination.
On Monday, Johnston's lawyer, Kish, declined to comment on the case. Alpharetta, Ga., lawyer Thomas J. Ford III, who is representing Robinson, said that no criminal charges have been brought against Robinson at this point. "Whether an indictment is forthcoming is yet to be determined," he said. Ford had no further comment on the case.
Atlanta attorney Raymond B. Lail, who is representing Tesvich's wife, Melissa, could not be reached for comment.
A spokesman for U.S. Attorney David E. Nahmias would neither confirm nor deny the existence of any criminal investigation.
Tesvich's attorney, Daniel P. Griffin of Atlanta, also could not be reached for comment.
On Monday, Home Depot spokesman Ron DeFeo could not comment because, "The matter is still under investigation by federal authorities."
According to the complaint, Tesvich received more than $10 million -- through bank accounts belonging to U.S. companies that he owned and controlled -- from foreign vendors. Those vendors secured "millions of dollars" in supply contracts from Home Depot between 2001 and 2005, the federal complaint stated.
As a product development merchant for Home Depot, Tesvich was responsible for finding foreign wholesale vendors who would supply the company's flooring department with low-cost, high-quality merchandise. In that post, Tesvich would often travel overseas, identify foreign manufacturers with whom Home Depot might do business, and then work with Johnston, Robinson and other flooring executives in Atlanta to forge business agreements with those international companies to sell flooring products to Home Depot, the federal complaint stated.
Johnston was responsible for the vendor selection and the purchase of all rugs and related accessories at Home Depot, according to court pleadings. Robinson had similar responsibilities for all hard flooring materials, according to the federal complaint.
While at Home Depot, Tesvich recruited Taiwanese firm Willieco Ltd. to supply vinyl tile; Chinese firms Chervon Ltd. for power tools and Taizhou Eagle Group Ltd. for ceiling tiles and rug pads; DC Mills of India for doormats; and Travertine Brothers in Turkey for stone tile. Home Depot purchased millions of dollars in flooring products from these firms, according to the complaint.
At the same time, Tesvich established two identically named U.S. firms, Chervon Power Tools Inc. and Willieco Ltd. -- which he owned and operated -- to act as domestic representatives of those same foreign suppliers that he had arranged to do business with Home Depot, according to the complaint. Tesvich and his wife then reaped more than $10 million in profits generated by those firms, according to federal prosecutors.
The majority of the $10 million in deposits to Tesvich's corporate bank accounts originated from overseas bank accounts held by Home Depot's international suppliers -- Willieco, Chervon and Travertine Brothers among them.
Home Depot corporate policies prohibit its employees from engaging in activities in which "their personal interests would interfere with company business" and bars employees from receiving "improper benefits" as a result of their positions with the company, such as bribes and kickbacks from suppliers, according to the civil complaint.
Specifically, Home Depot bars its employees from receiving any gift from a store vendor worth more than $50 without receiving a supervisor's approval, the complaint stated.
Shortly after his resignation from Home Depot in September 2005, Tesvich created five more companies that also acted as import brokers for overseas vendors conducting business with Home Depot's flooring department, and, through them, "sold millions of dollars in flooring products to Home Depot between the end of 2005 and July 2007," according to the federal complaint.
Tesvich established another company, Tyza Industries, in 2005 to develop California real estate, according to the complaint. Between November 2005 and April 2007, Home Depot's international flooring vendors in Turkey, India and Hong Kong poured more than $3 million into Tyza coffers, and Tyza Industries made payments that directly benefited Robinson and Johnston, according to the complaint.
Using his personal credit card, Tesvich allegedly bought $8,200 in "high-end" kitchen appliances (including a Sub-Zero wine cooler, refrigerator and ice machine) for Johnston's Smyrna, Ga., home, according to the federal complaint. Tyza Industries also issued checks totaling $82,451 to a construction company that completed a 2,215-square-foot basement in Johnston's home and paid an additional $15,000 for a home theater, including a 106-inch projection TV, the complaint stated.
Johnston told IRS and ATF agents who interviewed him July 10, 2007, that he had never received a bribe, kickback, cash or gift from Tesvich or any Home Depot vendor, according to the federal complaint. Johnston also denied that Tesvich had paid for the kitchen appliances that had been billed to Tesvich's personal credit card and delivered to Johnston's home address, the complaint stated.
That same day, FBI and ATF agents interviewed Robinson, who told them he had never received any gifts or kickbacks from Tesvich "except for small items and occasional dinners." But when federal agents asked Robinson about a $53,321 cashiers check from Tyza Industries that paid for Robinson's new Infiniti SUV, "Robinson admitted he had paid for the Infiniti with Tesvich's money ... and that he had lied to agents," the forfeiture complaint stated.
Federal agents traced more payments to Robinson from a Venezuelan ceramic tile distributor, Americer Corp., that sold millions of dollars in ceramic tile to Home Depot while Robinson was a flooring executive, according to the complaint. Americer Chief Executive Roberto Jakubowicz told FBI agents that he began making payments that benefited Robinson in May 2006 "after Robinson asked him for advance payments" in return for assisting Jakubowicz's business, according to the complaint. Shortly before Jacubowicz began making payments to Robinson, sales from Jakubowicz's firm to Home Depot "increased significantly," the complaint stated.
Jakubowicz's company subsequently issued seven checks totaling more than $269,000 to a California real estate development firm that in June 2007 sold to Robinson two Tennessee properties totaling $412,500, according to the complaint.
Between December 2006 and March 2007, four checks from Jakubowicz's company accounts totaling $135,161 were paid to Robinson's investment accounts, according to the complaint.
And in February 2007, a Jakubowicz company account issued a check for $33,575 to pay off Robinson's loan on his 2004 Cadillac Escalade, the complaint stated.
The day after FBI agents questioned Robinson last July, Robinson transferred the Cadillac's ownership to a friend but left his own residence as the registration's address, according to the federal complaint. After learning of the federal investigation, Robinson also executed a promissory note to Jakubowicz for $600,000, according to the complaint.
Federal prosecutors are seeking the forfeiture of Robinson's and Johnston's properties, and Robinson's investment fund because they were acquired with the proceeds derived from the alleged kickback conspiracy and "were involved in or are traceable to a money-laundering transaction," according to the complaint.