Bel Air Man Sentenced In $20M Wire Fraud, Tax Evasion Case

HARFORD COUNTY, MD — A 69-year-old Bel Air man has been sentenced to prison for his role in a conspiracy to commit wire fraud and tax evasion as part of a kickback scheme that defrauded his employer of more than $20 million.

According to his guilty plea, Elliott Dennis Kleinman was a longtime employee of a family-owned global business headquartered in New York, but had manufacturing facilities in Belcamp and Abingdon. Starting in 2012, Kleinman and another employee, Eugene DiNoto, used their management positions at the company to execute a fraudulent billing scheme where they would receive illegal kickbacks from various drum vendors doing business with the company, which used drums to store and transport its products.

As the facility managers, Kleinman and DiNoto oversaw the purchasing and storing of drums for use at the Harford County manufacturing facilities. They also had the authority to review drum invoices and authorize payments to the drum vendors. They partnered with Anthony P. Urcioli, Sr., owner and president of Tunnel, Barrel & Drum Co, Inc. (TBD), in Carlstadt, New Jersey, and Hartford Fibre Drum, Inc. Urcioli agreed to fraudulently invoice the company for more drums than what TBD sold and delivered to the company then split the extra money among the men, according to court documents.

Urcioli agreed to participate in the false billing scheme and in December 2013, Urcioli told DiNoto about Hartford, the other drum supply company Urcioli owned. The men agreed to include Hartford in their kickback scheme starting in January 2012. Urcioli created fake invoices, sent them to DiNoto, who then passed them on to the company's headquarters for payment.

To keep their activities under wraps, Urcioli created a handwritten purchase order ticket that summarized the breakdown of actual and bogus drum orders, and how the kickback amounts were calculated. Urcioli put a copy of the purchase order ticket in an envelope along with DiNoto’s and Kleinman’s share of the kickback amount payable via checks from TBD and Hartford, then sent the envelope to DiNoto’s and Kleinman’s personal residences. Urcioli wanted to pay the kickbacks to Kleinman and DiNoto by check so the payments would look like payments to drum wholesalers and be deductible as a cost of goods sold on TBD’s tax returns, court documents showed.

Between January 2012 and January 2020, Urcioli falsely invoiced the family-owned company a total of $20,300,757 and Kleinman’s share of the kickbacks was approximately $2,307,121. Kleinman opened and maintained two commercial bank accounts including one for a retail store he owned in Bel Air. Kleinman deposited the drum vendor’s checks into one of those two bank accounts where it was withdrawn as cash, used to pay personal expenses or transferred to the bank account for Main Street Cigars, prosecutors stated.

From 2017 through 2019, TBD paid Kleinman a total of approximately $1,034,911 in kickbacks for his role in the fraudulent billing scheme. Kleinman’s 2017 through 2019 income tax returns filed with the IRS did not report those kickback payments as personal or business income, resulting in a loss to the U.S. government of approximately $291,143, court documents showed.

Kleinman has been sentenced to 42 months in federal prison followed by three years of supervised release. He also was ordered by the judge to pay restitution of $19,300,757 and to forfeit $2,038,997. DiNoto, 53, of Bel Air, and Urcioli, Sr., 78, of Park Ridge, New Jersey, previously pleaded guilty to their roles in the scheme.