Plea from Mahopac Fire Department Treasurer in $5.6M Theft

Michael Klein, the former treasurer of the Mahopac Volunteer Fire Department who was accused of embezzling $5.6 million dollars from the volunteer organization, pleaded guilty Tuesday to wire fraud, subscription to false tax returns, obstruction of the grand jury, and false statement charges.

He was originally charged with one count of wire fraud and six counts of subscribing to false tax returns. The last two charges were added due to his actions as the investigation got underway.

“Michael Klein admitted today what we alleged – for over a decade, he violated the trust of his fellow volunteer fire fighters and used the Mahopac Volunteer Fire Department funds as his own slush fund,' U.S. Attorney Preet Bharara said in the announcement. "Klein took advantage of his position as the fire department’s treasurer and spent department money on himself, including paying for a yacht, a Florida home, jewelry, and an antique fire truck.”

Officials allege he spent most of the money on luxuries.

He'll be giving a lot of them back. Klein agreed to forfeit to the United States a sum of $5,675,360.49, his second home in Palm City, Florida, his equity in his yacht club in Palm City, cash held in various bank accounts, a 1931 American LaFrance antique fire engine, proceeds of a life insurance policy, a 2000 13-foot Nautica vessel with an outboard motor, and a 2005 Eliminator trailer.

SEE: Former Treasurer Accused of Embezzling Millions from Mahopac Fire Department

Elected treasurer in 2001, he began in 2002 to embezzle fire department funds by writing checks to the two businesses he owned, Abbie Graphic Services and Buckshollow Emergency Equipment Corp.

He entered these checks into the MVFD’s books as having been made payable to various vendors, other than Abbie Graphic or BEEC, that sold firefighting equipment or services used by fire departments.

Over 13 years, he embezzled more than $5.6 million by writing roughly 275 checks. He used the money to purchase, among other things, a 55’ Neptunus motor yacht named “K’Bam,” a second residence in Palm City, Florida, an antique fire truck, and jewelry. He also used the money to support Abbie Graphic and BEEC. KLEIN also failed to report most of this income on his personal tax returns for the period from 2009 through 2014, thereby subscribing to false tax returns for each of those years.

Following the discovery of the embezzlement in September 2015, Klein obstructed the grand jury’s investigation of his conduct by making false statements regarding his finances and by concealing and dissipating assets. For example, Klein sold K’Bam for $138,868 even though he had purchased it for $260,000, listed it for sale for $229,000, and rejected an offer he received for $175,000.

Klein also gave the United States Attorney a financial statement in which he falsely claimed, among other things, that BEEC had a delinquent loan of $275,000, and that, as a result of that loan, a lien was filed against Klein's Florida property, Bharara said.

He also concealed the proceeds he received from the sale of a Corvette by giving the money to a relative for deposit to her bank account and then arranging for the relative to pay his household bills. He also concealed an antique fire truck to prevent law enforcement from seizing it.

Klein, 48, of Mahopac, New York, and Palm City, Florida, pleaded guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison; six counts of subscribing to false tax returns, each of which carries a maximum sentence of three years in prison; one count of obstructing the grand jury’s investigation, which carries a maximum sentence of 20 years in prison; and one count of making false statements to the United States Attorney, which carries a maximum sentence of five years in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence will be determined by the court.

Klein is scheduled to be sentenced by Judge Cathy Seibel on June 21.

Bharara praised the outstanding investigative work of the Internal Revenue Service, Criminal Investigations, the Federal Bureau of Investigation, the New York State Comptroller, and the New York State Police. He thanked the Putnam County District Attorney’s Office for its assistance in the investigation.

This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Andrew Dember, Maurene Comey, Michael Maimin, James McMahon, Lauren Schorr, and Olga Zverovich are in charge of the prosecution.