NORTH CALDWELL, NJ — A North Caldwell man was released on bail after being arrested by FBI agents for fraudulently using funds that he solicited for bulk medical supply and consumer goods transactions, according to U.S. Attorney Paul Fishman.
Michael Esposito, 45, was charged by complaint with one count of wire fraud and appeared before U.S. Magistrate Judge Mark Falk in Newark federal court last week. 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.
Esposito, the president of three companies claiming to be in the business of purchasing consumer products in bulk from manufacturers for resale to wholesalers and retailers, controlled numerous bank accounts opened in the name of the following entities, among others: AME Consulting Group, LLC; AME Group, LLC; and AG Distributors, Inc. (collectively, the “Esposito Entities”).
According to the complaint, 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 an owner of a company based in or about Charlotte, North Carolina and maintained bank accounts in his name and that of the company he owned.
The complaint states that 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, according to the complaint, which then states that Esposito never delivered the medical supplies.
During that time, according to the complaint, 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 the victim a significant profit from these deals in return for an investment. Again, the complaint states that 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 the victim.
The complaint summarizes that all together, 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.
Esposito allegedly converted the rest of the funds for his own use. Since January 2014, Esposito has ceased communicating with Victim 1.
The charge and allegations contained in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to the charges. The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.