20 September 2004 LAWFUEL – Best for law news, legal research, a…

20 September 2004 LAWFUEL – Best for law news, legal research, attorney, law firm, criminal law news A Los Angeles man who owns several meat distribution companies pleaded guilty today to federal fraud charges for orchestrating a scheme in which he paid kickbacks to restaurant purchasing agents and caused the restaurant owners to pay inflated prices for his food.

Michael Silver, 60, of Los Angeles (90058) pleaded guilty today to three counts of mail fraud related to the kickback scheme. Silver owned and operated the downtown Los Angeles-based M&M Foods, American Distributors, California Food Distributing, General Provisions, Quality Foods, United Seafoods, and Universal Foods. Through these companies, Silver sold beef, poultry and seafood to restaurants, country clubs, hospitals and assisted living facilities throughout California, Nevada and Hawaii.

According to court documents filed in this case, in the scheme that ran from January 1997 through February 2002, Silver paid cash kickbacks to purchasing agents and chefs at the food facilities based on the quantity of food they ordered. Most of the time, Silver mailed the cash kickbacks directly to the purchasing agents at their homes.

As part of the scheme, Silver generated money for the kickbacks by increasing the final invoice prices of the food product. To obtain even larger cash kickbacks, some purchasing agents accepted less food than actually ordered.

A majority of the owners of the food facilities had no knowledge that their employees were receiving illegal cash kickbacks, nor did they have any knowledge that they were purchasing food product at increased prices or paying for food product not received.

Silver also pleaded guilty to two counts of tax evasion, admitting that he illegally deducted the cash kickbacks as a business expense on his 1998 and 1999 federal income tax returns. As a result of illegally declaring more than $10 million in kickbacks as an expense, Silver failed to pay the Internal Revenue Service more than $5.5 million in taxes.

Silver pleaded guilty before United States District Judge Robert M. Takasugi, who is scheduled to sentence the defendant on February 7, 2005. As a result of the guilty pleas to the five counts, Silver faces a maximum sentence of 70 years in federal prison.

This case is the result of an investigation by IRS-Criminal Investigation Division and the Federal Bureau of Investigation.

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