Two brothers, who once were high-flying executives with Systemax, have been sent to prison after pleading guilty to federal charges for accepting millions of dollars in bribes and kickbacks.
US District Judge Jose E Martinez gave 57-year-old Carl Fiorentino (formerly president of Systemax subsidiary TigerDirect) a six-year jail term, while 55-year-old Gilbert Fiorentino (former chief executive of Systemax’s Technology Product Group) received a five-year sentence.
According to reports, the pair cost Systemax about $27m (£17.6m) in higher supply costs, and Carl Fiorentino alone is reported to have received at least $9.5m in kickbacks from Taiwanese supplier RICI international.
The brothers were also reported to have received "bags of cash" from vendors in company car parks of Systemax subsidiary TigerDirect, including one filled with more than $240,000 in gold coins.
Martinez was quoted in the same article as saying: "They weren't really in the business of helping Systemax. They were in the business of helping the Fiorentino brothers."
Global player Systemax is headquartered in Port Washington, New York, with subsidiaries including TigerDirect, CompUSA and Misco, among others. The brothers' activities were uncovered by a US Securities and Exchange Commission investigation, and Gilbert Fiorentino was placed on administrative leave in April 2011.
At the hearing, Gilbert Fiorentino pleaded guilty to a conspiracy charge, while Carl Fiorentino pleaded guilty to fraud conspiracy and tax evasion. Carl Fiorentino had faced significantly more time than Gilbert Fiorentino – at one point estimated to be up to 25 years – but Martinez decided to sentence them to similar prison terms.
An article in the Washington Times reported that Eric Lerner, chief counsel at Systemax, said the crimes to which the brothers pleaded guilty likely represent "only a portion" of the frauds they committed between 2003 and 2011.
He added that the money was used on waterfront Coral Gables mansions, exotic cars, yachts, fine furniture and other trinkets of wealth. Gilbert Fiorentino did company business on his personal American Express card, accumulating 300 million points.
"Essentially, they were treating TigerDirect as their own personal candy store," Lerner said.
Both brothers made brief statements following the verdict.
Gilbert Fiorentino, who was the most senior ranking of the two at Systemax, said he had been proud of his achievements at Systemax.
But he added: "I think that pride turned into arrogance and greed. I know I broke the rules and I broke the law."
Carl Fiorentino said: "I can only blame myself. A bigger house and everything else did not make me a happy person."
A further hearing is scheduled for April to determine how much the brothers will have to pay back to their former employer. Some estimates are running into tens of millions of dollars.
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