LOS ANGELES
A jury found a Utah man guilty of being involved in a long-running scheme in which he sent fake invoices on behalf of a shell company to defraud a family-owned organic produce distributor out of $5.8 million, officials stated.
Kevin Scott Horton, 56, of Saratoga Springs, Utah, was found guilty of seven counts of mail fraud late Monday.
Based on the testimony during a nine-day trial, from February 2000 to April 2018, Horton conspired with Tony Anhtuan Rawlings, 57, from Garden Grove and the IT director at Melissa’s World Variety Produce Inc. in Vernon, to embezzle funds from Melissa’s by approving payments for non-existent IT services.
In February 2000, Horton established a fictitious company named Creative Network Solutions (CNS), designed specifically to issue fraudulent invoices to its only client, Melissa’s. Working in collaboration with Rawlings, Horton generated two bogus invoices each month, where CNS charged Melissa’s for IT services that were never delivered.
This scheme continued for about 18 years until February 2018.
Horton provided the fictitious invoices to Rawlings, who approved them, vouched for their operational necessity, and then forwarded them to Melissa’s executive, who was asked to have Melissa’s pay CNS the amounts listed on the sham invoices.
Horton and Rawlings falsely represented to Melissa’s executives that CNS provided IT services to Melissa’s. In fact, CNS never provided services to Melissa’s or any other company, and by using CNS, they deceived and concealed from Melissa’s that CNS was affiliated with one of their own employees.
Horton and Rawlings caused Melissa’s to send CNS payments in the form of checks mailed through the U.S. Mail to a post office box to which Horton had sole access.
Horton deposited the checks he received through the scheme into a bank account that he exclusively controlled. Horton then funneled Rawlings a portion of the money that Melissa’s paid to CNS in the form of checks sent via U.S. Mail to addresses where Rawlings lived.
In total, Horton and Rawlings caused Melissa’s to pay CNS approximately $5,852,604 because of the fictitious invoices.
U.S. District Judge Mark C. Scarsi scheduled an August 5 sentencing hearing. At that hearing, Horton faces up to 20 years in federal prison for each mail fraud count.
Rawlings pleaded guilty in August 2022 to one count of mail fraud. His sentencing hearing is scheduled for June 20.
The FBI investigated this matter.
Assistant U.S. Attorneys Eli A. Alcaraz of the Public Corruption and Civil Rights Section, Kelsey A. Stimson of the General Crimes Section, and Haoxiaohan H. Cai of the Major Frauds Section are prosecuting this case.