LI Firm Bills For Commercial Drums It Never Sold; Owner Pleads Guilty

BALTIMORE, MD — The owner of American Pride Distributors, a drum company in Woodbury, pleaded guilty on Wednesday to conspiracy to commit wire fraud in connection with a fraudulent billing scheme involving a manufacturing company with facilities in Maryland, the U.S. Department of Justice announced.

Robert A. DiNoto, 48, of Huntington, sold commercial drum containers used by manufacturers to store and transport products, according to his guilty plea. DiNoto is the brother of Eugene DiNoto, a former longtime employee of "Company 1," a family-owned global business headquartered in New York, but with manufacturing facilities in Belcamp and Abingdon, Maryland, both in Harford County, prosecutors said. "Company 1" was used by the U.S. DOJ to protect the identity of the company.

DiNoto faces up to 20 years in prison for conspiracy to commit wire fraud. He will also be required to forfeit and pay about $257,000 in restitution. He is scheduled to be sentenced March 21.

Eugene Andrew DiNoto, 51, of Bel Air, Maryland, previously pleaded guilty to conspiracy to commit wire fraud, engaging in an illegal monetary transaction, and filing a false tax return, in connection with schemes that defrauded his employer of more than $29 million. He is awaiting sentencing.

Between December 2016 and August 2019, Robert used American Pride’s invoices to bill and receive about $257,000 for drum deliveries that were never made, prosecutors said. Robert used the proceeds from the bogus billings for personal expenses, including to pay his credit card bills, officials said.

Beginning no later than 2014, Robert and Eugene agreed to execute a fraudulent billing scheme to defraud the firm by submitting fake invoices for undelivered drums, authorities said. Eugene, the facility manager for the company, oversaw the buying and storing of drums for use at the Harford County manufacturing facilities and had the authority to review drum invoices and authorize payments to the drum vendors, officials said.

Robert approached Eugene about how he could start his own drum vending company, according to the guilty plea. Eugene then told Robert about other drum vendors that were defrauding the company using a fraudulent billing scheme, prosecutors said. Robert, who was in the real estate business at the time, decided to use a company he owned, called Sandpiper Properties, Inc., trading as American Pride Distributors, to defraud the company, prosecutors said.

Once American Pride Distributors was formed, Robert began receiving drum purchase orders from Eugene for Company 1 to establish a legitimate pattern of drum sales between American Pride and the company. However, because Robert was never in the business of manufacturing or reconditioning drums, he filled orders by buying the needed number of drums from an actual drum manufacturer and arranging to ship them to facilities in Harford County, Maryland, authorities said. Robert billed for drums using American Pride invoices, which Eugene approved for payment via emails to the company's accounting department in New York, prosecutors said.

Soon after, Robert began fraudulently invoicing for drums that were never delivered, authorities said. To hide the phony invoices, he would intermittently send fake invoices before and after sending legitimate ones, prosecutors said. For example, in 2017, Robert DiNoto sent legitimate invoices between Feb. 15 and April 12 for about $18,000 to $21,000, prosecutors said. He then submitted a bogus invoice and received a payment for roughly $19,000 for a shipment of hundreds of 55-gallon steel drums that were never delivered.

To avoid scrutiny, the DiNoto brothers kept their familial relationship with American Pride a secret from employees, according to the guilty plea.

Third-party vendors used by American Pride would sometimes inadvertently forward an email or invoice intended for Robert DiNoto to the company instead, prosecutors said. Eugene would criticize Robert for the mistake and ask him to remind his third-party vendors never to send correspondence to the company's address, officials said. Robert DiNoto, at least once, used an alias to hide his identity when communicating with the company's employees, prosecutors said.