Bel Air Man Sentenced In $29M Kickback Scheme Involving His Employer

BEL AIR, MD — A longtime employee of a Harford County manufacturer has been sentenced to federal prison for his role in a $29 million kickback scheme.

According to his guilty plea, Eugene Andrew DiNoto, 54, of Bel Air was a longtime employee of Company 1, a family-owned global business headquartered in New York but with manufacturing facilities located in Belcamp and Abingdon. Starting in 2012, DiNoto and another employee, Elliott Kleinman, crafted a fraudulent billing scheme where they received illegal kickbacks from various drum vendors that conducted business with Company 1, which used drums to store and transport its products.

Anthony P. Urcioli, Sr., 81, of Park Ridge, New Jersey, was the owner and president of Tunnel, Barrel & Drum Co, Inc., located in Carlstadt, New Jersey, and of another drum supply company, Hartford Fibre Drum, Inc. Both companies did business with Company 1. After TBD became a drum supplier to Company 1, DiNoto and Kleinman entered an arrangement with Urcioli that permitted TBD to continue selling drums to Company 1 if Urcioli agreed to fraudulently invoice Company 1 for more drums than TBD actually sold and delivered to the company. Urcioli agreed to participate in the false billing scheme and split the extra money that Company 1 paid TBD for the made-up drum deliveries with DiNoto, the guilty plea detailed.

From approximately January 2012 until January 2020, DiNoto contacted Urcioli at least once per week to discuss the number and type of drums that he wanted delivered to Company 1’s Maryland facilities. During the same conversations, DiNoto told Urcioli how many additional drums to charge, but not deliver to Company 1 from TBD and later from Hartford. After Urcioli created the invoices that fraudulently billed Company 1 for both delivered and undelivered drums, DiNoto approved the invoices and sent them to Company 1’s headquarters for payment. Urcioli also created handwritten purchase order tickets that summarized the breakdown of actual and bogus drum orders and a breakdown of how the kickback amounts were calculated. Urcioli would put a copy of the purchase order ticket in an envelope along with DiNoto’s and Kleinman’s share of the kickback amount payable via checks from TBD and Hartford. Then he would send the envelope to their personal residences in Harford County.

Urcioli wanted to pay the kickbacks to DiNoto and Kleinman by check so the payments looked like payments to drum wholesalers and would be deductible as a cost of goods sold on TBD’s tax returns. DiNoto told Urcioli to make his kickback checks payable to a company linked to DiNoto called “Sandpiper Enterprises.” Kleinman advised that he wanted his kickback checks payable to a company he formed called “EDK Management, LTD.” Urcioli agreed, and in addition to making the kickback checks drawn on TBD and Hartford accounts payable to those companies, Urcioli wrote the word “drums” on the checks to further the pretense of legitimate purchases. DiNoto admitted that even though Sandpiper Enterprises was not engaged in any business, he maintained a commercial bank account for Sandpiper Enterprises at a local financial institution, where he deposited all the kickback checks he received, the prosecution stated.

Before accessing the criminal proceeds, DiNoto routinely transferred all or part of the money into one of the personal bank accounts he maintained at the same bank. DiNoto then withdrew the funds from his personal account or wrote a personal check against the balance. Between January 2012 and January 2020, DiNoto falsely invoiced Company 1 a total of $20,300,757. TBD and Hartford kept half of that amount while the remaining funds were sent to DiNoto and Kleinman. DiNoto’s share of the kickbacks was approximately $7,071,106. During the same eight-year period, DiNoto used drum vendors other than TBD and Hartford to execute his scheme to defraud Company 1, the prosecution disclosed.

On behalf of the other vendors, DiNoto submitted and approved invoices totaling approximately $9,197,181, resulting in a total loss of approximately $29,497,938 to Company 1. From 2017 through 2019, none of the $7 million plus in kickbacks DiNoto received for his role in the fraudulent billing scheme appeared as income on his tax returns, resulting in a loss to the U.S. government of approximately $1,374,694, the prosecution stated.

DiNoto has been sentenced to 70 months for conspiracy to commit wire fraud and engaging in an illegal monetary transaction and 64 months for filing a false tax return, followed by three years of supervise release.

Kleinman previously was sentenced to 42 months imprisonment and three years of supervised release. Urcioli was previously sentenced to time served and 12 months of supervised release. Both Kleinman and Urcioli were also ordered to pay restitution in the amount of $19,300,757.