Two South Florida brothers who were once top executives with the Systemax Inc. computer supply company were sent to prison Tuesday after pleading guilty to federal charges for accepting millions of dollars in bribes and kickbacks from companies doing business with their former employer.
U.S. District Judge Jose E. Martinez handed Carl Fiorentino, 57, a prison term of over six years, while 55-year-old Gilbert Fiorentino got five years behind bars. Records show their scam cost Systemax at least $27 million in higher supply costs and that Carl Fiorentino alone received at least $9.5 million in kickbacks from a Taiwanese supplier, RICI International.
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Assistant U.S. Attorney Jerrob Duffy said the brothers occasionally received bags of cash from vendors in company parking lots of a Systemax subsidiary, TigerDirect, including one filled with more than $240,000 in gold coins intended to help the scam escape detection. Duffy held that bag aloft in court as a symbol of the crimes.
"They weren't really in the business of helping Systemax," Martinez said. "They were in the business of helping the Fiorentino brothers."
Systemax, based in Port Washington, New York, has substantial operations in South Florida. Its brands include TigerDirect, Circuit City and CompUSA. The Fiorentino brothers founded the company in Coral Gables that became TigerDirect, and they later became executives at Systemax when it purchased TigerDirect in 1996.
Gilbert Fiorentino pleaded guilty to a conspiracy charge, while Carl Fiorentino pleaded guilty to both fraud conspiracy and tax evasion. Carl Fiorentino had faced significantly more time than Gilbert Fiorentino, but Martinez decided to sentence them to similar prison terms.
Eric Lerner, chief counsel at Systemax, said the crimes to which the brothers pleaded guilty likely represent only a portion of the fraud they committed between 2003 and 2011. He noted that the money was used on waterfront Coral Gables mansions, exotic cars, yachts, fine furniture and other toys of wealth. Gilbert Fiorentino did company business on his personal American Express card, accumulating some 300 million points.
"Essentially, they were treating TigerDirect as their own personal candy store," Lerner said.
Although the brothers were involved in multiple schemes, the biggest was with the company's Taiwanese supplier, RICI, and its top executive Eddy Kuo.
Over the years, RICI was paid more than $157 million by Systemax for various computer parts, cables and equipment. While RICI was paying the Fiorentino bribes and kickbacks for the business, Duffy said, it was also overcharging Systemax and TigerDirect by more than $27 million for the supplies.
"The companies paid more than they would have but for this corrupt relationship," the prosecutor said.
Kuo has also been charged in the case but has remained a fugitive in Taiwan. An April restitution hearing is scheduled to determine how much the brothers owe Systemax in restitution — likely in the tens of millions of dollars.
Both brothers were contrite and apologetic in brief statements Tuesday. Gilbert Fiorentino, who was higher-ranking of the pair at Systemax, said he had been proud of what he built.
"I think that pride turned into arrogance and greed," he said. "I know I broke the rules and I broke the law."
Carl Fiorentino said in the long run the scam wasn't worth it.
"I can only blame myself. A bigger house and everything else did not make me a happy person," he said.
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