Former Raley's advertising director uses paper-selling scheme to launder millions

12:57 AM, Feb 13, 2013   |    comments
  • Share
  • Print
  • - A A A +

SACRAMENTO, CA - A former Raley's advertising director pled guilty to laundering more than $2.5 million from the grocery store chain Tuesday.

David John Magana, 46, pled guilty to charges of conspiracy to commit mail and wire fraud and money laundering conspiracy, said Lauren Horwood, spokeswoman for the U.S. Attorney, Eastern District of California.

"The magnitude of Mr. Magana's misconduct is unacceptable," Sacramento Division FBI Special Agent in Charge Herbert M. Brown said. "The FBI is dedicated to identifying and pursuing cases where an employee intentionally takes advantage of an employer for financial gain."

Court documents showed that Magana used his position to charge a paper company and a printing company to pay a third-party a commission, which was paid to a co-conspirator; the companies paid the fee, but said they wanted to be reimbursed by Raley's. Horwood said Magana reimbursed the commissions to the companies by disguising them as additional charges within their regular invoices, which he then approved.

Magana was given a kick-back from his co-conspirator after being paid by the companies.

Horwood said Magana and his co-conspirators also sold significant qualities of paper that they stored in a warehouse. They would sell the paper at a discounted rate to different companies, then Magana would falsely report to Raley's that the paper was used for business.

Magana and his co-conspirators used two shell companies to launder the money they got for the commission fees and paper sales. One of the shell companies was used to sell paper to Raley's at an inflated rate, court documents showed.

"Mr. Magana abused his position to take control of millions of dollars of company money for personal profit," IRS CI Special Agent in Charge Jose M. Martinez said. "Not only did he defraud his employer, but the everyday customer. IRS CI is committed to identifying and investigating those who take advantage and impact the financial well-being of others for their own benefit."

Magana's sentencing is scheduled for June 4. He faces 20 years in prison and a $250,000 fine for the mail fraud charge; and 20 years in prison and a $500,000 fine for the money laundering charge. The actual sentence, however, will be determined at the discretion of the court, Horwood said.


Most Watched Videos