Preet Bharara, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS"), and Shantelle P. Kitchen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI"), announced today the arrest of ROCKWELL GAJWANI on charges of wire fraud, money laundering, and tax evasion. GAJWANI was arrested this morning by USPIS and IRS agents in Connecticut, and was presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Frank Maas.
U.S. Attorney Preet Bharara said: “As the chief executive officer of a Manhattan real estate company, Rockwell Gajwani was supposed to put the best interests of his company first. Instead, as alleged, he abused his position of authority to embezzle over a million dollars of company money. I thank the U.S. Postal Inspection Service and the IRS-CI for their work in this investigation."
USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Gajwani exploited the trust of his employer and preyed on unsuspecting employees to allegedly steal company funds for his own personal benefit, while evading payment of income tax on those funds. Postal Inspectors and their law enforcement partners will never tolerate this egregious behavior and will vigorously pursue and bring to justice anyone who participates in this criminal activity."
IRS-CI Special Agent in Charge Shantelle P. Kitchen said: “Everyone is responsible for paying their fair share of taxes, whether their income is legal or illegal. IRS-Criminal Investigation is responsible for investigating allegations concerning individuals who are willfully not reporting their income and are evading the taxes they owe, and we take our roles as protectors of the tax system very seriously."
As alleged in the Complaint unsealed today in Manhattan federal court:[1]
From October 2011 through March 2013, GAJWANI was the chief executive officer and president of a real estate investment company based in Manhattan (the “Manhattan Real Estate Company"). During this period, GAJWANI took over $1 million in company funds to which he was not entitled by, among other means, making wire transfers from the company’s bank account to his personal bank account, writing company checks to himself, and making cash withdrawals from the company’s bank account.
To accomplish this scheme, among other means, GAJWANI took steps to conceal his true salary and to conceal from the Manhattan Real Estate Company’s parent company (the “Parent Company") the amount of money he had taken from the Manhattan Real Estate Company’s bank account.
In or about February 2012, GAJWANI asked an employee of the Manhattan Real Estate Company (“Employee-1") to reduce GAJWANI’s salary to zero in the company’s payroll system, which Employee-1 did not do. Soon thereafter, GAJWANI asked Employee-1 to reduce his salary to $2,000 biweekly and did not provide an explanation to Employee-1 for this request. Ultimately, Employee-1 complied with this request and caused GAJWANI’s salary to be reduced in the payroll system from $26,923.07 on a biweekly basis - which reflects approximately GAJWANI’s agreed salary of $700,000 - to $2,000 on a biweekly basis.
Beginning in late 2012, the director of accounting for the Manhattan Real Estate Company (the “Director of Accounting") asked GAJWANI for details regarding GAJWANI’s compensation on more than one occasion, and GAJWANI repeatedly said he would get such details to her, but failed to do so. On another occasion, in connection with a request from the Parent Company for financial information, GAJWANI told the Director of Accounting not to provide that information to the Parent Company. To further conceal the funds he had taken from the Manhattan Real Estate Company, GAJWANI directed employees of the Manhattan Real Estate Company to lump the compensation of all employees together in accounting materials provided to the Parent Company, so that GAJWANI’s compensation would not be listed separately from the aggregate figure. GAJWANI also directed certain employees of the Manhattan Real Estate Company not to communicate with employees of the Parent Company.
Over the course of his employment, GAJWANI wrote himself over $940,000 in checks from the Manhattan Real Estate Company’s bank account, and wired over $1,700,000 to his personal bank account. Although some of these funds were purportedly for expenses, by the end of his employment GAJWANI had taken over $1,300,000 more from the Manhattan Real Estate Company’s bank account than he was entitled to under his employment agreement.
GAJWANI also concealed his fraud on the Manhattan Real Estate Company by laundering the proceeds of his fraud. Specifically, on two occasions in May 2012, GAJWANI wrote checks to an employee of the Manhattan Real Estate Company (“Employee-2") from the company’s bank account. GAJWANI wrote “expenses" in the memo line of each check, although neither check was meant to pay company expenses, and instructed Employee-2 to write a check in return directly to GAJWANI himself. Employee-2 did so on both occasions. In this manner, GAJWANI was able to secure over $30,000 in payments that GAJWANI appeared to receive from Employee-2 but in reality were funds GAJWANI had taken from the Manhattan Real Estate Company.
In addition to defrauding the Manhattan Real Estate Company and engaging in money laundering, GAJWANI did not file tax returns or pay taxes for his legitimate salary or for the money he had secured through fraud. Ultimately, in or about July 2015, after he learned of a criminal investigation, GAJWANI filed tax returns for calendar years 2011, 2012, and 2013. Each of those returns included false representations. For tax year 2011, the Federal Income Tax Return that GAJWANI filed understated GAJWANI’s actual income by more than $480,000, and included over $85,000 in false impermissible tax deductions. For tax year 2012, the Federal Income Tax Return that GAJWANI filed included over $260,000 in false impermissible tax deductions. For tax year 2013, the Federal Income Tax Return that GAJWANI filed underreported GAJWANI’s actual income by $270,000.
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GAJWANI, 52, of Darien, Connecticut, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of money laundering, which carries a maximum sentence of 20 years in prison; and three counts of tax evasion, each of which carries a maximum sentence of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Bharara praised the outstanding investigative efforts of law enforcement personnel at USPIS and IRS-CI.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jonathan Cohen and Andrew D. Beaty are in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Source: U.S. Department of Justice, Office of the United States Attorneys
