[Editor's note: This article has been updated since it was first posted on March 7.]
WHITE PLAINS, N.Y. - The former treasurer of the Mahopac Volunteer Fire Department pleaded guilty Tuesday morning (March 7) to wire fraud, subscription to false tax returns, obstruction of the grand jury, and false statement charges before U.S. District Judge Cathy Seibel.
Michael Kline, 48, had been accused of embezzling more than $5.6 million from the department’s treasury over the course of 13 years.
“Michael Klein admitted today what we alleged—that 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,” said U.S. Attorney Preet Bharara. “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.”
According to the allegations contained in the indictment and statements made in related court filings and proceedings: Klein was first elected treasurer of the MVFD in 2001. From January 2002 to September 2015, he embezzled MVFD funds under his control by writing checks to the two businesses he owned, Abbie Graphic Services, Ltd. (“Abbie Graphic”), and Buckshollow Emergency Equipment Corp. (“BEEC”). He then deposited the checks to bank accounts held by Abbie Graphic or BEEC. 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.
Klein embezzled more than $5.6 million by writing approximately 275 checks over a period of more than 13 years. He used the money to purchase, among other things, a 55-foot Neptunus motor yacht named “K’Bam,” a second residence in Palm City, Fla., 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 law enforcement’s discovery of the embezzlement in September 2015, Klein obstructed the grand jury’s investigation of his conduct by making false statements about his finances and by concealing and dissipating assets. For example, he 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. He 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 his Florida property. Klein 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.
Appearing in federal court in White Plains Tuesday morning, Klein 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.
In pleading guilty, Kleinagreed to forfeit to the United States a sum of $5,675,360.49, his residence in Palm City, his equity in his yacht club in Florida, 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.
Klein is scheduled to be sentenced by Judge Seibel on June 21 at 2:30 p.m.
Bharara praised the investigative work of the IRS, the FBI, the New York State Comptroller’s Office and the New York State Police. He thanked the Putnam County District Attorney’s Office for its assistance in the investigation.
The 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.