Opinion ID: 765616
Heading Depth: 3
Heading Rank: 1

Heading: Summary of the Scheme to Defraud

Text: 7 In its Memorandum and Order, dated September 5, 1996, the district court found that the Defendants engaged in a scheme primarily designed to defraud Cofacredit and Societe Generale, a large French bank. In short, the Defendants submitted sham invoices to Cofacredit for factoring and assigned sham invoices to Societe Generale in exchange for similar financing. The invoices appeared to evidence firm sales of plumbing fixtures by HED-France to Windsor and thus to require payment of a certain sum. But HED-France was not selling plumbing fixtures to Windsor. Instead, unbeknownst to Cofacredit and Societe Generale, HED-France was consigning the plumbing fixtures to HED-US, which was, in turn, supplying the fixtures to Windsor and Windsor World. Under the consignment agreement, HED-US was not obligated to pay HED-France for the fixtures until they were sold to retail customers by Windsor World. Thus, while the invoices factored by Cofacredit and assigned to Societe Generale appeared to evidence firm sales to Windsor, in fact they did not. The Defendants misrepresented the invoices as true sales for approximately 11 months. During this time, HED-France obtained payment from Cofacredit and Societe Generale for goods it had not actually sold. For their part, the Windsor Defendants obtained cost-free inventory. In addition, the Windsor Defendants represented the consigned inventory as owned inventory and used it as collateral for loans from other financial institutions. Through these actions, the district court found, the Defendants conspired to commit and did commit common-law fraud and civil RICO violations.