Mount Vernon, NY – In a case exposing a sophisticated international fraud scheme, Charles Colbert and his company, along with his vice president Jack Colbert and affiliated company Signo Trading, were convicted of multiple felony counts in June 1986. The case, investigated jointly by the Environmental Protection Agency (EPA), the Federal Bureau of Investigation (FBI), and the Agency for International Development, revealed a deliberate “bait and switch” operation targeting a chemical import business in Zimbabwe.
The Colberts, operating within the chemical trading industry, engaged in a scheme where they shipped a recycled chlorinated solvent mixture to Zimbabwe, falsely representing it as containing the chemicals originally ordered. Investigations revealed the actual chemical content of the shipments was a mere 1% of what was promised – a blatant deception designed to defraud the overseas buyer. The scheme involved the use of both Signo Trading and SCI, companies under the control of the Colberts, to facilitate the illegal transactions.
The legal proceedings began on December 12, 1985, with a 32-count indictment charging Charles Colbert, Jack Colbert, and their companies with conspiracy, multiple counts of wire and mail fraud, making false statements, false claims, transportation of false securities, and obstruction of justice. A superseding 30-count indictment was filed in May 1986, streamlining the charges but maintaining the core accusations of fraudulent activity. After a six-day trial, a jury returned guilty verdicts on 27 felony counts against each of the Colberts and 26 felony counts against Signo Trading and SCI.
Statutes Violated & Penalties
The Colberts and their companies were found to have violated several federal statutes, including:
- 18 U.S.C. 1343 – Wire Fraud: Involved the use of interstate wire communications to execute a fraudulent scheme.
- 18 U.S.C. 1341 – Mail Fraud: Utilized the U.S. Postal Service to further the fraudulent scheme.
- 18 U.S.C. 1001 – False Statements: Making materially false statements to authorities.
- 18 U.S.C. 287 – False Claims: Submitting false claims for payment.
- 18 U.S.C. 2314 – Transportation of False Securities: Transporting fraudulent documents across state lines.
On July 28, 1986, sentencing was handed down. Both Charles and Jack Colbert received 13-year prison sentences to run consecutively with any other state or federal sentences they may be serving. They were also ordered to pay $1,350 in costs under the Comprehensive Crime Control Act and $66,000 in restitution. Jack Colbert faced an additional $50,000 fine on the conspiracy count. Signo Trading and SCI were each fined $250,000, plus $1,300 in costs. The substantial fines and lengthy prison sentences underscore the severity of the fraud and the court’s commitment to prosecuting international criminal activity.
Key Facts
- Defendants: Charles Colbert, Jack Colbert, Signo Trading, SCI
- Location: Mount Vernon, New York
- Scheme: International “bait and switch” involving misrepresented chemical shipments to Zimbabwe.
- Chemical Content: Shipments contained only 1% of the chemicals ordered.
- Agencies Involved: EPA, FBI, Agency for International Development
- Sentencing: 13-year prison sentences for both Colberts, significant fines for individuals and companies, and $66,000 in restitution.
This case serves as a stark reminder of the reach of fraud and the dedication of federal agencies to investigate and prosecute those who exploit international trade for personal gain. The collaborative effort between the EPA, FBI, and USAID was crucial in unraveling the complex scheme and bringing the perpetrators to justice.
Source: EPA ECHO Enforcement Case Database
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