Wayne Man Charged in Conspiracy to Defraud Sheraton Hotel

Two employees of a hotel owned by the University of Pennsylvania conducted a multi-year conspiracy to defraud their employers by submitting overbilled invoices for third party vendors in exchange for kickbacks, according to an indictment filed by the U.S. Attorney’s Office in the Eastern District of Pennsylvania.

Kenneth Kapikian, 57, of Wayne, and Dennis Gagliardi, 60, of Chester Springs, were charged Tuesday with a scheme to defraud the University of Pennsylvania that allegedly lasted between 2009 and 2013. The defendants are each charged with seven counts of wire fraud and one count of conspiracy to commit money laundering, announced United States Attorney Zane David Memeger.

According to court documents, the defendants, engaged in a scheme to fraudulently obtain monies from the University of Pennsylvania by falsely billing the University for services the defendants never provided to the Sheraton University City Hotel.

Kapikian and Gagliardi were employed by Meyer Jabara Hotels, a third party company that provided management services to the Sheraton University City Hotel for the University of Pennsylvania. According to the charges, Kapikian was the general manager, who had the ability to hire contractors and furnish payments for services, and Gagliardi was the chief engineer, responsible for the operation and maintenance of the building.

The pair created Cold Wash Zone in 2006, a company that made and installed laundry machines in hotels. The legitimate business functions for Cold Wash Zone ceased in 2008, the charges say, but the pair billed Sheraton with 49 phony invoices for more than $2.3 million between 2008 and 2013.

The Information further alleges the defendants directed vendors of the Sheraton University City Hotel to inflate their invoices submitted to the hotel and then pay them the fraudulently inflated amounts as kickbacks. Charges against the co-conspirators have slowly been released, as well, including a Bucks County man who operated an IT services company.

According to the court documents, Thomas Luther of Upper Southampton, allegedly submitted inflated invoices to Kapikian and Gagliardi, who filed them with the company for full payment and received more than $140,000 in kickbacks from Luther in exchange. He has been charged with wire fraud and faces a maximum possible sentence of 20 years in prison, a three-year period of supervised release, a fine of up to $250,000, and a $100 special assessment if convicted.

Charges have not been filed against the other co-conspirators, who remain unidentified but known to prosecutors. They include an interior designer who allegedly paid Kapikian more than $499,000 in kickbacks and a construction contractor who allegedly dished out more than $62,000.

If convicted, Kapikian and Gagliardi each face a maximum possible sentence of 160 years in prison, a three-year period of supervised release, a fine of up to $500,000, and an $800 special assessment.