Hauppauge CEO Pleads Guilty To $20M Fraud

A Hauppauge CEO pleaded guilty to taking a part in fraud scheme that diverted more than $20 million from a California county government and two businesses on Friday.

Ingentra HR Services Inc. CEO Albert Cipoletti, 61, has pleaded guilty for his role in a scheme to divert more than $20 million from special districts in Sacramento County, Calif.,  by underpaying his clients' federal taxes during payroll.

"While prosecuting those who abuse their access to public funds is always a top priority of the U.D. Department of Justice, it is particularly vital during these difficult budgetary times," said U.S. Attorney Benjamin Wagner in a statement.

In 2004, Ingentra HR Services, then known as Humanic Solutions, was hired by Sacramento County to profess the payrolls for its special districts. These include the Sacramento Metropolitan Fire District, the cemetery district, the parks and recreation district, independent contractors and various elected officials. Ingentra was also hired to perform payroll duties for SanDisk Corporation and The Stanley Works and Stanley Solutions.

Cipoletti and his co-defendant Kerry Seaman, comptroller for Ingentra, devised a scheme from 2005 to April 2010 to collect the tax withholdings  paid to the IRS from their clients, but under report to the IRS the amount owed, according to a plea agreement. The $20 million difference was diverted into Ingentra's operating account for the company's use.

Under the plea agreement, Cipoletti admitted to sending funding letters to his clients that correctly calculated the payroll and federal tax withholdings for clients' employees. Sacramento County, SanDisk and Stanley Works then wired funds to Ingentra to pay for both payroll and taxes.

Cipoletti and Seaman then filed false 941 documents to the IRS, understating the employee tax for these clients, to pocket excess of $20 million for Ingentra.

Cipoletti is scheduled to be sentenced by Judge Garland Burrel, Jr. on Jan, 21, 2011 at 9 a.m. The maximum  penalty for wire fraud violation is 20 years in prison and a fine of up to $35 million.

The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This is not the first time Cipoletti has been accused of defrauding clients in this way. According to a 2006 Newsday article, Cipoletti, then operating a company called Total Time,  filed for bankruptcy that year leaving more than 600 clients with unpaid tax bills from the state and federal governments.