Date: 10-14-2015

Case Style: United States of America v. Michael J. Mitrow, Jr.

Case Number: 1:13-cr-00633-PAE

Judge: Paul A. Engelmayer

Court: United States District Court for the Southern District of New York (New York County)

Plaintiff's Attorney: Assistant United States Attorney Andrew Young and Department of Justice Tax Division Senior Litigation Counsel Nanette L. Davis

Defendant's Attorney: Peter Ginsberg

Description: New York, NY - Former Chief Executive Officer Of Marketing Agency Sentenced In Manhattan Federal Court For $2 Million Fraud And Kickback Scheme

MICHAEL J. MITROW, Jr. (“MITROW”), the former CEO and President of a pharmaceutical marketing company (the “Marketing Agency”), was sentenced to three-and-a-half years in prison for participating in a scheme to defraud the Marketing Agency in which MITROW obtained over $2 million in fraud and kickback proceeds, and for willfully failing to report that unlawful income to the Internal Revenue Service (“IRS”). MITROW pled guilty in January 2015 before U.S. District Judge Paul A. Engelmayer, who also imposed today’s sentence.

Manhattan U.S. Attorney Preet Bharara said: “Michael Mitrow defrauded the marketing agency that he led as its CEO out of over $1 million, using it to pay personal expenses including $600,000 to fly in private jets. His fraud and his failure to report the proceeds as income resulted in a federal conviction for Mitrow. At his sentencing today, he learned that the price of his crimes is not only repayment of the ill-gotten money but also the loss of his liberty.”

Acting Assistant Attorney General Caroline Ciraolo said: “Corporate officers who engage in fraud and kickback schemes and fail to report their illegal gains are defrauding their employers and cheating honest taxpayers. The sentence handed down today sends a strong message that these individuals will be held to account for committing offenses that were made possible by violating their fiduciary obligations.”

According to the Indictment and Superseding Information previously filed in Manhattan federal court, other court filings, and statements made during the proceedings in this case:

MITROW was the CEO and President of the Marketing Agency from 1998 through approximately 2009. From approximately 2008 through 2009, MITROW defrauded the Marketing Agency by submitting fraudulent invoices for consulting services that were purportedly provided to the Marketing Agency but were, in fact, never provided. Instead, MITROW used the proceeds from those invoices to fund more than $600,000 in private jet travel. In addition, MITROW willfully failed to report to the IRS (1) his income from the fraudulent consulting invoices, which exceeded $600,000; (2) $1.4 million in kickback payments he received from Creative Press and East Coast Vending, printing and direct mail marketing companies owned by co-defendant Robert Madison and located in Phoenix, Arizona, in order to help grow the business through additional printing and direct mailing contracts for Creative Press with the Marketing Agency; (3) $200,000 in personal purchases that MITROW made with his corporate credit card and fraudulently coded as business expenses of the Marketing Agency; and (4) $415,000 in payments by the Marketing Agency to a relative of MITROW and his co-defendant and brother, Matthew Mitrow, despite the representations made by the Mitrows to a private equity firm that acquired the Marketing Agency that the relative had severed all ties to the Marketing Agency.

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MITROW, 48, of Whitehouse Station, New Jersey, pled guilty to one count of conspiracy to commit wire fraud and one count of tax evasion. In addition to the prison term, MITROW was sentenced to three years of supervised release and 200 hours of community service in each of those years. He was also ordered to pay restitution in the amount of $83,219 to the IRS and $1,468,259.43 to the Marketing Agency.

Matthew Mitrow, 42, of Westfield, New Jersey, previously pled guilty to one count of filing a false tax return for the 2008 tax year, and was sentenced in July 2015 to three months in prison. As part of his plea agreement with the Government, Matthew Mitrow paid restitution of $30,822 to the IRS.

Robert Madison, 44, of Henderson, Nevada, pled guilty to one count of conspiracy to commit honest services fraud in the payment of undisclosed kickbacks to the Mitrow brothers, and was sentenced in May 2015 to 18 months in prison and 18 months of home confinement. As part of his plea agreement with the Government, Madison will be subject to an order of restitution in an amount to be determined by the Court.

Mr. Bharara thanked the Internal Revenue Service - Criminal Investigations and the United States Postal Inspection Service for their outstanding investigative work in this case. Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for its assistance.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.

Outcome: See above

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Defendant's Experts:

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