A federal grand jury in the District of Puerto Rico filed an indictment last Friday against two individuals for an alleged case of fraud using Social Security numbers, federal prosecutor on the island, W. Stephen Muldrow, said Tuesday.
As indicated, the defendants are Gilberto J. Meléndez Colón and Ángel M. Pagán Vélez, who were accused of conspiracy to commit electronic fraud and misuse of the Social Security number. Meléndez Colón also faces 11 money laundering charges.
The Social Security Administration, the Office of the Inspector General (SSA-OIG) and the National Security Investigations (HSI) are in charge of the investigation.
“The formal accusation accuses that from January 4, 2012 or approximately and until July 24, 2017, the defendants and other co-conspirators deliberately conspired and agreed to devise a scheme and device to defraud Unique Builders, Inc. , a family business dedicated to short-term and long-term construction and improvement projects. In order to execute the scheme and the artifice to defraud, the defendants and co-conspirators caused the transmission by means of cable communications in interstate commerce of certain signals and sounds contrary to Title 18, United States Code , Section 1343, ”Muldrow said in written statements.
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He explained that during the time covered by the accusation, Meléndez Colón was the accountant in charge of the payroll of Unique Builders. The company’s payroll accounting system is operated, in part, by the web cash administrator of the Banco Popular de Puerto Rico. 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 never worked at Unique Builders.
The indictment, according to Muldrow, alleges that Meléndez Colón created profiles or accounts for two fictitious employees in the Web Cash Manager Program. As part of the fraud plan, Pagán Vélez revealed his social security number to Meléndez Colón. He would use Pagán Vélez’s name and social security number to create a fictional employee profile in the Unique Builders Web Cash Manager Program.
I would also use the name and social security number assigned to J.A.A. to create another fictional employee profile in the Unique Builders Web Cash Manager Program. In total, Meléndez-Colón created two fictitious employee profiles in the Unique Builders Web Cash Program, using the identities of Pagán-Vélez and J.A.A.
While creating the fictional employee profile for Pagán Vélez in the Web Cash Manager Program, Meléndez Colón listed his own Banco Popular de Puerto Rico account number to receive direct deposits. As part of the fictional profile of J.A.A. employees 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 the payroll information of Unique Builders by increasing, among others, fictitiously the hours worked by regular employees. Meléndez Colón would then send the altered and fraudulent payroll information to management for approval. Once Meléndez Colón obtained approval to process the payroll, he would divert the money through the Web Cash Manager Program to the bank accounts assigned to the two fictitious employees. From January 2012 to July 2017, Meléndez-Colón diverted approximately 1 million 223 thousand 654 dollars as part of the illegal conspiracy.
As part of the conspiracy, Unique Builders would generate W-2 forms, withholding statements for payments made to fictitious employees. For the years 2012 to 2016, Pagán-Vélez would use his social security number to file income tax returns, attaching the W-2, withholding statements, generated as part of the fraud scheme. The defendant Meléndez Colón also faces a charge of aggravated identity theft and a charge of forfeiture of 1 million 223 thousand 654 dollars.
The case is being processed by the United States Deputy Special Prosecutor for the Social Security Administration, Vanessa D. Bonano Rodríguez. If convicted, the defendants could face a maximum penalty of 20 years in prison and a fine of no more than $ 250,000 for the conspiracy, and up to five years for improper use of the Social Security number. In addition to those possible sentences, Meléndez Colón faces up to 20 years in prison and a fine of no more than $ 500,000 or twice the value of the property involved in the transactions, whichever is greater, for the money laundering charge, and two consecutive consecutive years of imprisonment for the charge of aggravated identity theft.
The accusations contain only charges and are not evidence of guilt. The defendants are presumed innocent until proven guilty.