DENVER — Two former executives were sentenced to more than four years in prison for taking part in a scheme to defraud a Colorado-based data management company of nearly $2 million, federal prosecutors in U.S. District Court of Colorado said Monday.
Michael Vergato, 52, was sentenced to 46 months in federal prison and was fined $20,000; while Mark Perlstein, 60, was sentenced to 35 months in federal prison and was fined $15,000 in connection with the scheme.
Prosecutors alleged that both devised a scheme to bill a shell company created by Verato for performance tuning services of Arrow Electronics’ Oracle EBS databases.
That shell company, Orale Performance Tuning and Optimization, LLC (OPTO), submitted 21 fraudulent contracts and invoices to the data management company for database performance tuning services that were never performed.
Perlstein, in his position as CEO, approved the invoices and wired payments to OPTO, funneling nearly $2 million in company funds, according to a news release. Both then divided the proceeds, concealing their involvement by using personal email accounts, other corporate entities, and fake identities.
At the trial, which lasted six days, the data management company’s current CEO testified that the company could not substantiate any work performed by OPTO or identify any actual employees or contractors related to that entity. Further, tax records confirmed OPTO paid no salaries and issued no contractor forms, according to prosecutors.
In total, the data management company paid OPTO $1,949,023. Of that amount, Vergato kept approximately $874,000, using the funds for luxury vehicles, credit card payments, retirement accounts, and rent. Perlstein personally received more than $1 million through the scheme, prosecutors said.
“These defendants’ greed has earned each of them years in federal prison, and they have to pay back every dollar they took,” said United States Attorney Peter McNeilly. “Corporate fraud of this magnitude undermines confidence in our business community and harms employees, customers, and shareholders alike. These sentences send a clear message: executives who abuse their authority for personal gain will be held accountable.”
At their sentencing, the court ordered restitution of $1,949,023, for which both men are jointly liable. After their prison terms, Vergato and Perlstein will each serve three years of supervised release, prosecutors said.
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