VAR Pleads Guilty In Overbilling Scheme

Mitchell Kleinman, president and CEO of Ryjac Computer Solutions, allegedly collaborated with two other individuals to overbill two customers and then split the profits, according to a filing with the United States District Court, Western District of North Carolina, Charlotte Division.

He pleaded guilty to counts of conspiracy and money laundering conspiracy.

Two other individuals were named in the complaint: William Hagood, who was director of IT services for Hickory Springs Manufacturing Co. and later information technology director for Georgia Pacific (the two companies allegedly defrauded in the scheme) and Allan Bellanca, who was a sales representative with U.S. Bancorp, which helped provide lease financing.

A call to Ryjac's headquarters seeking comment was forwarded to Kleinman's voice mail.

All three individuals are expected to plead guilty, according to a representative of the court.

From about 2000 to 2005, the scheme allegedly defrauded Georgia Pacific by about $970,000 in invoices paid to bank accounts for two shell companies, Pyramid Software Services and Systems Software Group, controlled by Hagood. In addition, another $100,000 worth of media and electronics equipment allegedly was billed to Georgia Pacific and delivered to Hagood's home for his personal use, according to the complaint.

After Hagood left Georgia Pacific for Hickory Springs Manufacturing, the group allegedly overbilled that company by about $1.8 million from January 2006 to September 2007, according to the complaint.

Kleinman and Hagood allegedly arranged for Hickory Springs to overpay Ryjac and Recovery Solutions Inc. (a dba for Ryjac) through invoices that "grossly inflated and were entirely fictitious in order to provide kickbacks to the conspirators," according to the complaint.