Officer of HM Systems Inc. Sentenced for Role in Defrauding Defense Products Manufacturer and Filing False Tax Return,
Ordered to Pay $842,902 in Restitution
Santa Ana – LawFuel – On August 19, 2008, Haresh Majmundar, Officer and director of HM Systems, Inc. (HMS) was sentenced to serve 12 months and one day in federal prison and three years probation for violations of mail fraud (Title 18 USC 1341); Aiding and Abetting (Title 18 USC 2); and, Subscribing to a False Tax Return (Title 26 USC 7206(1)) involving his participation in a scheme to defraud BAE Systems Aircraft Controls, Inc., (BAE) a company that designs and manufactures military aircraft, radar, and avionics, and other defense related products. District Court Judge Cormac J. Carney also ordered that Majmundar pay $842,902.03 in restitution to BAE. This action relating to Majmundar comes after the February 1, 2008 sentencing of Hashmukhlal Patel, who participated in the scheme with Majmundar to defraud BAE and was sentenced to serve 41 months in federal prison and 36 months probation. District Court Judge David O. Carter also ordered Patel to pay $1,142,030 in restitution.
According to the information and plea agreements filed for Majmundar and Patel, from about June 2000 and continuing to about April 2003 in Orange County, Majmundar, along with Patel devised and executed a scheme to defraud BAE through the submission of fraudulent claims for payment for goods that were not, in fact, delivered. Majmundar, together with Patel, caused fraudulent bids to be submitted to BAE so that HM Systems, Inc. would be selected as a vendor on certain Purchase Orders with HMS.
In order to carry out the scheme to defraud, Majmundar and Patel made false and deceptive statements to BAE. Both Majmundar and Patel represented to others at BAE that BAE needed certain goods from HMS when, in fact, the goods were not needed or had already been developed by BAE in-house. Majmundar falsely identified himself as an HMS employee named “John Kirk” and made oral and written misrepresentations to give the false impression that HMS was a reliable vendor. Majmundar and Patel made false representations to reassure BAE’s Purchasing Department that the payments made to HMS were necessary and legitimate and to prevent BAE from discovering their fraudulent scheme, including misrepresentations regarding the delivery of goods. Patel did so without disclosing to BAE his financial relationship with Majmundar and HMS.
Majmundar and Patel induced BAE to pay approximately $1,142,031 (“BAE Funds”) to HMS for goods that HMS did not deliver to BAE. The BAE Funds were then disbursed with a majority going to Patel and a small percentage to Majmundar.
Majmundar admitted in his plea agreement that on July 11, 2002, that he filed a false 2001 US Corporate Income Tax Return (Form 1120), which contained the false HMS Cost of Goods Sold figure of $527,198, when in fact, as Majmundar knew, this amount was misstated for the purpose of disguising the true nature of disbursements of fraudulently obtained funds to his co-conspirators.
Patel admitted in his plea agreement that on December 19, 2002, he filed a false 2001 Joint Income Tax Return for himself and his wife. The return was filed with the Internal Revenue Service, and signed under penalty of perjury by Patel. Patel admitted that he knew the return was false in that it failed to state the income that Patel fraudulently received approximately $367,189 from HMS during tax year 2001. The tax loss resulting from Patel’s unreported income, including relevant conduct for tax years 2000, 2001, 2002, and 2003, is approximately $267,621, not including penalties and interest.
This investigation in the product of an investigation by IRS-Criminal Investigation (IRS-CI) and Defense Criminal Investigative Service.
Contact: Assistant United States Attorney Robert Keenan (714) 338-3597