Wednesday, May 9, 2018
The Michigan Attorney Discipline Board has suspended an attorney on his federal wire fraud guilty plea.
Biz Times reported
According to the plea agreement, Scott Hess and Craig Hilborn began their scheme in April 2000. Hess, a tax lawyer at Johnson Controls, had gone to law school in the 1980s with Hilborn, who had taken over a small personal injury and product liability firm in Michigan.
The plea agreement says the two stayed in touch over the years and Hess complained to Hilborn that he was overworked. Sometime in the year 2000, Hess proposed a scheme where he would bill Hilborn’s law firm for work Hess had actually done.
“Hilborn agreed, although he knew that his firm would not, and indeed could not, perform the type of legal services for which he would be ‘billing,’” the agreement says.
The duo agreed Hess would receive two-thirds of the payments Hilborn received from JCI. The company paid out $4.48 million of the $4.7 million Hilborn invoiced JCI for during the duration of the scheme.
Hilborn would mail a check to Hess’ Menomonee Falls home for about two-thirds the amount he received from JCI and kept a log of the payments, documenting them as “referral fees.”
The agreement says Hess deposited the checks into his personal bank account, using the money to invest in stocks and to purchase “tens of thousands of dollars of guns.”
Johnson Controls discovered the scheme in late 2015 and conducted an internal investigation. The plea agreement says Hess and Hilborn both admitted to their role in the scheme and Hess made a voluntary restitution payment of $2.3 million.
“Following an internal investigation, Johnson Controls notified the FBI of its findings of a multi-year scheme of fraud committed by former employee Scott Hess in collusion with a third party vendor,” Fraser Engerman, a JCI spokesman said in a statement. “The company cooperated with the FBI and U.S. Attorney as the investigation was conducted and we are appreciative of their efforts to resolve the case. Doing business with integrity is the only way Johnson Controls does business and we hold all employees accountable to act in an ethical and legal manner.”
The agreement also says Hess conducted a similar scheme to benefit an ex-girlfriend, submitting invoices to the company for hourly administrative work supposedly done by the woman.
Hess and Hilborn each face up to 20 year in prison and a $250,000 fine. Hess has agreed to pay nearly $3 million in restitution before sentencing and Hilborn has agreed to pay nearly $1.5 million.
A sentencing date has not been set. Attorneys for Hess and Hilborn did not immediately respond to requests for comment.
More on the crimes from the Milwaukee Journal Sentinel. (Mike Frisch)