Former TigerDirect Execs Charged Over Kickbacks And Fraud Amounting To $9 Mil
Carl and Gilbert Fiorentino were top executives at TigerDirect, until both men were fired from the company in 2011; Carl had been the company’s president, and Gilbert, it’s CEO. The brothers, both residents of Coral Gables, Florida, were charged with a variety of crimes relating to securities fraud and impeding the IRS. According to the Miami Herald, both men are expected to plead the charges; this is generally what happens when charges are brought by criminal information and not by indictment.
The South Florida Business Journal reports that the charges state that the former TigerDirect execs received millions of dollars in the form of kickbacks from suppliers, and the money was used to support a lavish lifestyle, including luxury homes, furniture, and yacht equipment. The charges have been filed in federal court.
As the former CEO of TigerDirect, Gilbert Fiorentino was also the director of TigerDirect’s parent company, Systemax. He has been charged with conspiracy to impede the IRS, and conspiracy to commit securities fraud, and may face five years imprisonment if convicted. His brother, Carl, was charged with conspiracy to commit mail and wire fraud, as well as tax evasion. If convicted, the former president of TigerDirect faces 25 years in prison.
Jonathon Randles of Law360 wrote about the TigerDirect investigation.
“In their roles with Systemax, a publicly traded company, and its TigerDirect unit, the Fiorentinos were required to sign annual conflict-of-interest questionnaires in compliance with the Sarbanes-Oxley Act. The brothers signed the questionnaires from 2005 through 2011, never revealing the payments they received from Systemax vendors, prosecutors allege.”
It appears that the investigation began in 2011, when Systemax began a whistleblower investigation of its Miami-based TigerDirect operation. According to InternetRetailer, the investigation ended with the board of directors voting on May 3, 2011, to accept Gilbert Fiorentino’s resignation. At that time, Systemax did not comment on the TigerDirect investigation pursued by the SEC, except to say that it was cooperating fully.
In the FBI statement regarding the charges, IRS-CI Special Agent in Charge Jackson had this to say.
“These high-ranking corporate officials held positions of trust not only in their companies but also in the eyes of the public. They chose to receive kickbacks and side payments that they intended to hide from Systemax and the IRS. Their criminal actions are unacceptable to both investors and to the tax paying public. IRS Criminal Investigation, along with its law enforcement partners, will vigorously pursue corporate officers who misuse their positions of trust and violate the tax laws.”
