GUILTY: General Motors Exec Convicted for Fraud & $6.5 Million Kickback Scheme
A former General Motors Corporation executive, who was a fugitive abroad for more than a year, returned to the United States on Wednesday and pleaded guilty on Friday in Chicago to federal charges related to a kickback and fraud scheme involving GM’s sale of bulk aluminum to third parties.
The defendant, Daniel J. Bealko, GM’s former global commodity manager for lightweight metals, also pleaded guilty to federal income tax evasion, admitting that he concealed from the IRS approximately $6.5 million in kickbacks he received from his co-defendant, a Chicago area businessman who was engaged in metal brokerage and commodity trading businesses and who previously pleaded guilty in the case.
Bealko, 62, formerly of Clarkston, Michigan, was believed to be living in the Caribbean islands of St. Kitts and Nevis when he was indicted in March 2008, together with Anthony Demetrius Brown, who owned businesses in Illinois and Nevada related to metal sales, sports and entertainment.
Bealko was arrested last year in Liechtenstein, where he underwent extradition proceedings. Those proceedings were withdrawn after Bealko agreed to return to the United States voluntarily and plead guilty. He was taken into federal custody when he arrived in Chicago and he was ordered detained by U.S. District Judge Charles Kocoras. Sentencing is scheduled for January 19, 2010.
Bealko agreed to the entry of a forfeiture judgment of $6.5 million and further agreed to assist the US government in repatriating certain foreign assets, including approximately $3.3 million held in a bank account in Liechtenstein, which would be applied toward restitution to GM.
Bealko’s guilty plea was announced during a press conference by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois. Fitzgerald gained national attention when he served as special prosecutor for the Valerie Plame-CIA probe.
Meanwhile, Anthony Demetrius Brown, 48, also known as “Tony Brown,” pleaded guilty to engaging in the kickback and fraud scheme in October 2008 and is currently awaiting sentencing.
Bealko was GM’s Global Commodity manager between 1996 and December 2003, and was entrusted with the discretionary authority to devise and implement a plan for GM to divest its extensive bulk aluminum holdings between late 1998 and December 2003. During the 1990s, GM acquired several hundred million pounds of bulk aluminum, a large portion of which it decided to sell by the late 1990s.
To protect itself from price fluctuations, GM engaged in hedging strategies, such as commodities futures trading, typically through the New York Mercantile Exchange and the London Metals Exchange. In court today, Bealko said that the bulk aluminum sales totaled approximately $1 billion.
Brown was the owner of the former Fuci Metals USA, a bulk metal sales broker, and the Commodities Management Exchange, which auctioned bulk metal through an Internet-based exchange, CMXchange.com, both of which had offices in suburban Northfield, Illinois. Brown also had an interest in sports and entertainment-related businesses, principally based in Las Vegas, including CMX Sports & Entertainment and CMX Productions.
Between mid-1998 and December 2003, Bealko received approximately $6.5 million in kickbacks from Brown for steering GM bulk aluminum sales on favorable credit terms to Fuci Metals, which then re-sold the aluminum for a small profit to third parties that Bealko located and on sales terms that he negotiated.
Rather than repay GM, Brown diverted funds that he had obtained from the sale of GM’s aluminum to goods and services for his own personal benefit and on his sports and entertainment business interests. As a result, Fuci became insolvent, leaving GM with a debt of approximately $83 million.
In his plea agreement, Bealko admitted that he told Brown that he had not been adequately compensated by GM in light of the substantial sums he made for the company in managing its aluminum positions. And Bealko complained that GM’s medical insurance was not sufficiently covering the costs of medical care required by a close family member.
In pleading guilty to tax evasion for 2002, Bealko admitted that he had nearly $1.35 million in taxable income and owed at least $490,000 in taxes that he did not pay. In total, between 1998 and 2003, Bealko admitted willfully under-reporting his taxable income by $6.5 million (the total amount he received in kickbacks), resulting in a tax loss to the government of approximately $1.82 million.
Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police and he’s a staff writer for the New Media Alliance (thenma.org). In addition, he’s the former editor for the House Conservatives Fund’s weblog. Kouri also serves as political advisor for Emmy and Golden Globe winning actor Michael Moriarty.
He’s former chief at a New York City housing project in Washington Heights nicknamed “Crack City” by reporters covering the drug war in the 1980s. In addition, he served as director of public safety at a New Jersey university and director of security for several major organizations. He’s also served on the National Drug Task Force and trained police and security officers throughout the country. Kouri writes for many police and security magazines including Chief of Police, Police Times, The Narc Officer and others. He’s a news writer for TheConservativeVoice.Com and PHXnews.com. He’s also a columnist for AmericanDaily.Com, MensNewsDaily.Com, MichNews.Com, and he’s syndicated by AXcessNews.Com. He’s appeared as on-air commentator for over 100 TV and radio news and talk shows including Oprah, McLaughlin Report, CNN Headline News, MTV, Fox News, etc.
To subscribe to Kouri’s newsletter write to COPmagazine@aol.com and write “Subscription” on the subject line.
| More from Jim Kouri
Stumble It!
