Five Florida men were charged in U.S. District Court late last month in a scheme to defraud Xerox of $25 million.
Robert Lee Fisher, Bryan Day, Jason Haynes, Kyle Haynes, and David Haynes, all of Daytona Beach, were charged by criminal complaint with mail and wire fraud, conspiracy to commit mail and wire fraud, and money laundering conspiracy in connection with a scheme to defraud Xerox.
The men were arrested Tuesday and are scheduled to make an initial appearance Friday before U.S. Magistrate Judge Jonathan W. Feldman.
According to the criminal complaint, Fisher owned RBM Imaging Inc., which was an authorized reseller of Xerox office equipment.
The other defendants owned Haynes Brothers Furniture in Volusia County, Florida, and "two sham companies, HDH Graphics LLC and Aldar Securities," according to a release from the U.S. Attorney's Office. Those two companies were used to defraud Xerox in Webster.
Under Fisher's contract with Xerox, those who bought Xerox printers would order Xerox toner to use in the printers.
Xerox had a partner program called the North American Resellers PagePack program. The program was a partnership between Xerox and North American resellers, in which the resellers could buy Xerox office equipment at wholesale prices and then resell the equipment to small and medium-sized businesses for a profit.
"The purchasers, rather than pay Xerox for the toner, would pay Xerox based on the number of prints made with the toner," a release continued. "At all times, the toner belonged to Xerox until consumed by the purchasers." The purchasers could never sell the toner.
Fisher entered into this contract with Xerox in 2006, according to the criminal complaint.
Between 2008 and 2013, Fisher allegedly sold more than 60 printers to the sham companies, HDH and Aldar. With the help of Fisher, the other four defendants allegedly over-ordered $25 million worth of toner from Xerox.
"Having so many printers was to deceive Xerox into believing that HDH was making a large amount of prints, thus justifying the ordering of a large amount of toner," the criminal complaint alleged. HDH manually provided meter reads, instead of connecting the Xerox-supplied software to its printers.
In one instance in 2009, Xerox contacted Bryan Haynes about this. He said he didn't want the software on his computer for "security reasons." Xerox ultimately granted HDH an exemption, "making it easier to deceive Xerox," the criminal complaint said.
Xerox mailed Fisher two warnings about HDH breaching the manual meter read process.
Authorities allege the defendants never used the toner to make prints, "or for legitimate business purposes." Jason, Kyle, and David Haynes, along with Day, falsely reported to Xerox that their two companies made 61,147,896 prints during the five-year period.
Prosecutors said they never made nearly that many prints.
In the largest sale, the three Haynes defendants and Day then sold the toner illegally to a buyer in Miami, Florida for $9.4 million. The defendants allegedly split the proceeds from the illegal sale.
According to the criminal complaint, Xerox again notified Fisher in April 2011 that it was going to stop sending toner to Aldar until Xerox "received justification for the excessive amount" of toner ordered by Aldar.
A month later, Fisher allegedly emailed Xerox "false print samples that made it appear Aldar was legitimately using more toner than the industry average," the criminal complaint said. This deceived Xerox into continuing the shipment of toner.
The fraudulent print samples included an Aldar "company logo and security-related photographs where the print coverage area on the paper was much larger than the industry average," authorities said.
The charges carry a maximum penalty of 20 years in prison and a $250,000 fine.