A North Caldwell, New Jersey, man was arrested this morning by FBI agents for fraudulently using funds that he solicited for bulk medical supply and consumer goods transactions, U.S. Attorney Paul Fishman announced.
Michael Esposito, 45, is charged by complaint with one count of wire fraud. He appeared on Tuesday, October 1, in Newark federal court and was released on bail.
According to the complaint:
Esposito was the president of three companies that purported to be in the business of purchasing consumer products in bulk from manufacturers for resale to wholesalers and retailers.
In August 2013 Esposito told an individual referred to in the complaint as “Victim 1,” that Esposito had a customer that backed out of the purchase of medical supplies. Victim 1 was able to locate a buyer to whom Victim 1 could sell the goods for profit. However, after Victim 1 wired Esposito funds for the medical supplies, Esposito allegedly used the funds for unrelated expenses, including payments to apparent victim investors from prior transactions, restaurant bills, and salary for himself and others. Esposito also sent Victim 1 numerous fraudulent communications that the delivery of the medical supplies was imminent. Esposito never delivered the medical supplies to Victim 1.
During that time, Esposito also sent Victim 1 numerous emails detailing a series of investment opportunities in which Esposito would purchase consumer goods in bulk at substantial discounts. Esposito offered to give Victim 1 a significant profit from these deals in return for Victim 1’s investment. Again, Esposito used the funds for his own benefit instead of making the purported investments. He also sent Victim 1 emails and text messages falsely stating that certain deals were in progress or that problems with Esposito’s bank were preventing him from wiring funds to Victim 1.
Altogether, Victim 1 had more than $1 million wired to Esposito for the medical supplies and consumer goods transactions. During this time, Esposito caused approximately $517,000 to be sent by wire transfer to Victim 1, falsely representing that these funds were the return of principal and profits from successful deals. He converted the rest of the funds for his own use. Since January 2014, Esposito has ceased communicating with Victim 1.
The charge of wire fraud is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.