It cost its clients more than $628,000.
A guilty plea was entered in US District Court in Baltimore on Thursday in a fraud case involving a Frederick Company. Chester William Bigelow, 58, of Woodbine, pleaded guilty to conspiracy to commit mail and wire fraud.
He was the President of RMS Direct, Inc., a mail preparation company which submitted large volume mailings to the US Postal Service on behalf of its customers, many are non-profit organizations. US Attorney for Maryland Rod Rosenstein says Bigelow and his partner, Stephen Reid, 50, of Frederick, contracted with customers to prepare and to sent out by USPS large-volume mailings such as pamphlets, brochures, books and other printed materials. The two e-mailed postal documents to clients indicating that the mailings were being sent out. "Bigelow admitted that beginning in 2005, he and Reid had started to falsify those postage statements and misrepresented their clients that mailings were being sent out in a timely fashion, when in fact they were not," Rosenstein says.
He says the non-profits relied on these mailings to raise funds.
Beginning in 2009, Rosenstein says, the pair selected mailings that were not submitted to the Postal Service for delivery, and continued to charge customers their services. "So initially they started delaying the delivery and then they simply stopped delivering. But they continued to represent to the clients that the mailings had been made as ordered and therefore caused the clients to overpay them for their postage and their services," he says.
19 clients of RMS Direct lost a total of $628,581.48, according to the US Attorney's Office.
Bigelow is scheduled to be sentenced on July 30th, 2013 before US District Court Judge Catherine Blake. He could get up to 20 years in prison, and a fine of $250,000. He will also be required to forfeit $13,500 that he withdrew from the RMS bank account for personal use.
As part of his sentencing, Rosenstein says Bigelow will be required to forfeit the $628,581.48 that he bilked out of his clients. But, he says, there's no guarantee the victims will receive their money back. "Often, in these fraud case, the assets have been dissipated. The defendants often have spent the money," says Rosenstein. "But we trace it. And so if we can find that those criminal proceeds were passed on to any friends and relatives, or concealed in a bank account, or used to purchase any asset like a vehicle or a home, we can forfeit that property as well."
Reid already pleaded guilty to the same charge as Bigelow, and is expected to be sentenced on July 12th.