Two Individuals Indicted And Arrested For Conspiracy To Commit Wire Fraud And Misuse Of Social Security Number

Date: 
Tuesday, March 3, 2020
Office Affiliation: 
From the U.S. Attorney’s Office, District of Puerto Rico:
 
SAN JUAN, P.R. – On February 27, 2020, a federal grand jury in the District of Puerto Rico returned an indictment against Gilberto J. Meléndez-Colón and Ángel M. Pagán-Vélez, charging them with conspiracy to commit wire fraud, and misuse of Social Security Number. Meléndez-Colón is also facing 11 counts of money laundering, announced United States Attorney W. Stephen Muldrow. The Social Security Administration, Office of the Inspector General (“SSA-OIG”) and Homeland Security Investigations (“HSI”) are in charge of the investigation.

The indictment charges that from on or about January 4, 2012, and continuing through on or about July 24, 2017, the defendants and other co-conspirators did knowingly and willfully conspire and agree  to devise a scheme and artifice to defraud Unique Builders, Inc., a family business engaged in short and long-term construction and improvement projects. For purposes of executing the scheme and artifice to defraud, the defendants and co-conspirators caused to be transmitted by means of wire communications in interstate commerce certain signals and sounds contrary to Title 18, United States Code, Section 1343.

During the time covered by the indictment, Meléndez-Colón was the Accounting Officer in charge of Unique Builders’ payroll. The company’s payroll accounting system is operated, in part, by the Web Cash Manager of Banco Popular of Puerto Rico (hereinafter “Web Cash Manager Program”). The Web Cash Manager Program is an accounting system used by Unique Builders in part to make direct deposits to employees. Pagán-Vélez was a friend of Meléndez-Colón, and he never worked at Unique Builders.

The indictment alleges that Meléndez-Colón created profiles or accounts for two fictitious employees in the Web Cash Manager Program. As part of the fraud scheme, Pagán-Vélez disclosed his social security number to Meléndez-Colón. Meléndez-Colón would use Pagán-Vélez’ name and social security number to create a fictitious employee profile in Unique Builders’ Web Cash Manager Program. Meléndez-Colón would also use the name and social security number assigned to J.A.A. to create another fictitious employee profile in Unique Builders’ Web Cash Manager Program. In total, Meléndez-Colón created two fictitious employee profiles in Unique Builders’ Web Cash Program, using the identities of Pagán-Vélez and J.A.A.

While creating the fictitious employee profile for Pagán-Vélez in the Web Cash Manager Program, Meléndez-Colón listed his own Banco Popular of Puerto Rico account number to receive direct deposits. As part of the fictitious employee profile for J.A.A. in the Web Cash Manager Program, Meléndez-Colón listed his own Cooperativa San José account number to receive direct deposits.

The indictment also alleges that Meléndez-Colón altered Unique Builders’ payroll information by, among others, fictitiously increasing the hours worked by regular employees. Meléndez-Colón would then submit the altered and fraudulent payroll information to management for approval. Once Meléndez-Colón got approval to process the payroll, he would divert monies through the Web Cash Manager Program to the bank accounts assigned to the two fictitious employees. From January 2012 through July 2017, Meléndez-Colón diverted approximately $1,223,654.21 as part of the unlawful conspiracy.

As part of the conspiracy, Unique Builders would generate Forms W-2, Withholding Statements for the payments made to the fictitious employees. For the years 2012 through 2016, Pagán-Vélez would use his social security number to file Income Tax Returns, attaching the W-2’s, Withholding Statements, generated as part of the fraud scheme. Defendant Meléndez-Colón is also facing one count of aggravated identity theft and a forfeiture allegation of $1,223,654.21.

The case is being prosecuted by Special Assistant United States Attorney for the Social Security Administration Vanessa D. Bonano-Rodríguez. If convicted, the defendants could face a maximum penalty of 20 years of imprisonment and a fine of not more than $250,000.00 for the conspiracy, and up to 5 years for the misuse of Social Security number. In addition to those possible sentences, Meléndez-Colón is facing up to 20 years of imprisonment and a fine of not more than $500,000.00 or twice the value of the property involved in the transactions, whichever is greater, for the money laundering counts, and two mandatory consecutive years of imprisonment for the aggravated identity theft count.

Indictments contain only charges and are not evidence of guilt. Defendants are presumed to be innocent until and unless proven guilty.