Operation Bob The Builder: A.G. Schneiderman Announces Indictment Charging Warren County Couple With Money Laundering Scheme And Theft Of Over $1.2 Million

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
April 17, 2018

Attorney General’s Press Office / 212-416-8060
nyag.pressoffice@ag.ny.gov
Twitter: @AGSchneiderman 

OPERATION BOB THE BUILDER: A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT CHARGING WARREN COUNTY COUPLE WITH MONEY LAUNDERING SCHEME AND THEFT OF OVER $1.2 MILLION

Robert J. Mirel, A/K/A Robert Morel/RJ Mirel, And Deborah F. Burnett, A/K/A Debra Burnett/Deborah Barnett/ “Debbie Turner,” Allegedly Charged Over 40 Customers For Glass Installation Equipment They Never Provided

Mirel And Burnett Allegedly Operated Front Business—Arlington Equipment Corp. D/B/A Arlington Manipulators – which Laundered Criminal Proceeds through Shell and Shelf Companies

Defendants Face 5 To 15 Years In Prison For Money Laundering, Grand Larceny, Scheme To Defraud, Tax Fraud, And Labor Crimes

QUEENSBURY – Attorney General Eric T. Schneiderman today announced the unsealing of an indictment charging Robert J. Mirel a/k/a Robert Morel a/k/a RJ Mirel and Debra Burnett a/k/a Deborah Barnett a/k/a “Debbie Turner,” the owners and operators of Arlington Equipment Corp. d/b/a Arlington Manipulators, with defrauding companies and business owners throughout New York and the United States by pretending to sell glass installation equipment and laundering hundreds of thousands of dollars in criminal proceeds through their shell and shelf companies. The Attorney General’s investigation, dubbed “Operation Bob the Builder,” revealed that Arlington Equipment Corp. was one of the only manufacturers of glass manipulators in North America at the time the business started in Queensbury, NY. Glass manipulators are used by glass and glazing companies around the world to help perfectly install heavy glass in high-rise buildings and position custom pieces of glass at angles other than 90-degree intervals. As the indictment alleges, over at least five years, Mirel and Burnett allegedly took advantage of this near monopoly and stole over $1.2 million from over 40 customers across the country, the New York Department of Labor, The New York Department of Tax and Finance, and several employees, who were not fairly compensated.

Both defendants were arrested today on a 29-Count indictment including charges of Grand Larceny in the Second and Third Degrees and Money Laundering in the Second Degree. Mirel, 71, and Burnett, 65, were arraigned today in Warren County Court before the Honorable John S. Hall, Jr. Mirel remains in custody on a $500,000 cash bail or $1 million bond. Burnett remains in custody on a $100,000 cash bail or $300,000 bond. If convicted of all counts, Mirel and Burnett face between 5 to 15 years in state prison.

“As we allege, the defendants orchestrated a brazen scam to trick unsuspecting businesses, consumers, and even their own employees—resulting in millions of stolen dollars,” said Attorney General Schneiderman. “Companies are obligated to provide consumers with the goods and services they pay for and workers with fair pay—and my office will continue to hold those who try to shirk these legal responsibilities to account.”

New York State Police Superintendent George P. Beach II said, "I applaud the work performed on this case by our State Police Investigators, the Attorney General’s office, and our law enforcement partners at all levels. These individuals used a devious scheme to victimize consumers for their own gain and because of the strong collaboration among law enforcement we were able to expose this fraud. The State Police will continue to work with our law enforcement partners to end these types of fraudulent practices and hold accountable those who prey on innocent people and think they can get away with these schemes.”

“Under Governor Cuomo, stopping Unemployment Insurance fraud is a top priority of the Department of Labor,” said State Labor Commissioner Roberta Reardon. “When criminals defraud the State by underpaying their UI contributions, it raises costs for law-abiding businesses that then have to pay more into the system. The full breadth of alleged fraud and theft in this case is stunning and I’m pleased we were able to assist the Attorney General in bringing these individuals to justice.”

“The depth and scope of this investigation far outweighed our capabilities, and without the assistance of the Attorney General’s office, the victims in this case might never have received an opportunity to see their day in court,” said Lt. Steve Stockdale, Warren County Sheriff’s Office

“The brazen extent of the fraud and theft alleged in this case should be abhorrent to all law-abiding citizens and businesses, including those who faithfully comply with their tax obligations,” said NYS Department of Taxation and Finance Acting Commissioner Nonie Manion. “We thank our partners in law enforcement for their ongoing help in investigating and prosecuting those who flout our laws.”  

According to the indictment, by 2012, customers purchasing manipulators from Arlington Equipment Corp. provided a down payment of at least 50% but allegedly never received a finished product. By April 2013, Arlington had terminated almost all of their employees. Nevertheless, Arlington continued to take dozens of orders for manipulators through at least 2016. Allegedly, in many instances, Mirel and/or Burnett would inform customers that the manipulators were complete and ready to ship, but they required customers to pay the balance of the order prior to shipment; however, after receiving the balance, Arlington never sent the manipulator to the customer. 

The Attorney General’s investigation further revealed that Burnett and Mirel allegedly used bank accounts of shell and shelf companies that they set up at multiple financial institutions to launder the proceeds of their criminal enterprise through at least eight banks accounts. Shell companies serve as a vehicle for business transactions without having any significant assets or operations. Shelf companies are entities that are created and left with no business activity, and subsequently used at a later point in time without the need to go through the procedures of creating a new entity. These entities included Arlington Equipment Corp.; Debbie Turner Music, LLC; Autowild International, LLC; Arlington Holding Management, LLC; AllMobile Technologies, LLC; and Arlington Manipulators.

According to statements and filings by the Attorney General’s office at arraignement, since at least 2012, Mirel and Burnett allegedly laundered money through their corporate entities in various ways, including but not limited to:

  • Making substantial cash withdrawals of victim money, then purchasing official bank checks payable to one of their other entities, and subsequently paying personal expenses with those funds so as to appear as if they were coming from a legitimate source of income;
  • Making substantial cash withdrawals of victim money, then purchasing official bank checks payable to one of their other entities, and subsequently writing checks back to an Arlington account in an attempt to artificially inflate the sales cash flow;
  • Structuring cash withdrawals and deposits in an attempt to move criminal proceeds undetected; and,
  • Taking new victims’ money both for personal benefit and using it to buy parts to build manipulators for prior victims that had not received their manipulators as originally promised.

According to statements by the Attorney General’s office, by 2016, Mirel and Burnett also allegedly created a prospectus showing an estimated cash flow of over $11 million, in an attempt to sell Arlington and attract investors to provide funding necessary to continue perpetrating their scheme. In this prospectus, they indicated that they anticipated selling more than 50 manipulators per quarter, or 200 manipulators a year. As the indictment alleges, these numbers were grossly inflated, as Arlington never manufactured more than 10 manipulators per year.

In addition to these allegations, Mirel and Burnett are charged with taking manipulators from victims for repairs, and then either repairing and selling them to other customers, or dismantling them to use their parts in new and refurbished products without the permission of the original owners. 

When customers complained, Mirel would allegedly provide excuses that, in most cases, went on for years. According to the Attorney General’s office, Arlington often told victims that parts were unavailable or on backorder, while telling the few employees that worked there that there was no cash to purchase the necessary materials to build the manipulators. Meanwhile, Arlington allegedly continued accessing the victims’ money to carry out their criminal activity and pay personal expenses; in some instances, Arlington even asked employees to pay for materials, promising to reimburse them once the sale was made, yet never did so. According to the indictment, employees are owed over $100,000 in parts purchased on behalf of Arlington.

Moreover, Mirel and Burnett allegedly paid themselves and employees with payroll checks from Paychex, Inc., as well as corporate checks and cash, giving their employees the misimpression that their W2s would reflect their tax withholdings, when in fact that money was not being withheld. Paying employees lower wages allowed Mirel and Burnett to allegedly keep that money for themselves, while employees incurred the tax liabilities associated with their income. Mirel and Burnett also allegedly falsely reported their income to the NYS Department of Taxation and Finance on the IT-201 Personal Income Tax Filings for the tax years of 2013 and 2014 by an excess of $470,000, incurring a liability in excess of $30,000. Furthermore, they allegedly falsely caused NYS-45 Forms to be filed with the NYS Department of Labor, so as to not pay and underpay unemployment insurance. 

Mirel and Burnett were each charged in the indictment with the following 29 felonies: Money Laundering in the Second Degree, a class C felony (two counts); Grand Larceny in the Second Degree, a class C felony (two counts); Grand Larceny in the Third Degree, a class D felony (fourteen counts); Scheme to Defraud in the First Degree, a class E felony (one count); Criminal Tax Fraud in the Third Degree, a class D felony (two counts); and Offering a False Instrument for Filing in the First Degree, a class E felony (eight counts).

The charges are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law.

Attorney General Schneiderman thanks the New York State Police Financial Crimes Unit, Senior Investigator Timothy Marten and Investigator Charles Williams, Warren County Sheriff Nathan H. “Bud” York and Investigator Christopher J. Hatin, New York State Department of Taxation and Finance Forensic Tax Auditor Kimlee A. Stewart, New York State Department of Labor Unemployment Insurance Division Auditor Samantha Ernst and Assistant Director of Adjudication and Determination Lynne Camileo and Assistant Deputy Commissioner for Worker Protection Milan Bhatt, and the Warren County District Attorney Jason M. Carusone and his office, for their valuable assistance on this investigation.

The case is being prosecuted by Assistant Attorney General Philip V. Apruzzese of the Attorney General’s Criminal Enforcement and Financial Crimes Bureau. The Bureau is led by Bureau Chief Stephanie Swenton and Deputy Bureau Chief Joseph D’Arrigo. The Criminal Division is led by Executive Deputy Attorney General for Criminal Justice Margaret Garnett and Chief Deputy Attorney General Alvin L. Bragg, Jr.

The OAG investigation was conducted by Investigator Mark J. Terra, under the supervision of Deputy Bureau Chief Antoine Karam. The Investigations Division is led by Chief Investigator Dominick Zarrella. Forensic accounting was performed by Associate Forensic Auditor Meaghan E. Scotellaro (Scovello). The Forensic Audit Section is led by Chief Auditor Edward J. Keegan and Deputy Chief Auditor Sandy Bizzarro.