Computer enthusiasts and hardware fans know that one of the best places to buy stuff in retail stores is from Fry's. Fry's is one of the larger retail sellers of electronics and computer hardware, but most of its 34 stores are located in California and Texas.
Fry's VP has allegedly embezzled over $65 million from the retailer to fund a lavish lifestyle that included massive gambling and a penchant for driving a Ferrari. The VP in question is Ausaf Umar Siddiqui and he is accused by the IRS of cutting deals with some of Fry's largest suppliers to buy larger orders of goods from them in return for kickbacks and higher than normal commissions.
Siddiqui allegedly often bought the goods at higher prices than he could have received in exchange for kick backs of up to 31% of the total sales price according to the Associated Press. The kickbacks were funneled into a company that Siddiqui set up called PC International.
The IRS reports that five unnamed vendors had made deposits into accounts owned by PC International totaling $65.6 million. Of the amounts deposited, a massive sum of $17.9 million was paid out to Las Vegas Sands Corp, the operator of the Venetian Casino Resort in Las Vegas according to complaints filed in the case.
Siddiqui's gambling habits were so massive that the casino would charter private jets to fly him to Las Vegas to gamble. The man was arrested at Fry's headquarters and a judge ordered him held on a $300,000 bond.
Siddiqui was Fry's VP of merchandising and operations making an annual salary of $225,000 and supervised a staff of 120 employees. He and his team were responsible for buying all of the merchandise sold in Fry's locations.
According to the IRS, Siddiqui was able to mass such a large amount of funds in the shell company by convincing Fry's executives to allow him to be responsible for a job normally handled by independent contractors. The typical commission for sales of products at Fry's range from three to eight percent of the total sales the items bring in.
The IRS claims that the deals for the massive commissions that Siddiqui had brokered were in exchange for guaranteeing that he'd keep the products stocked on shelves. The elaborate and lucrative scheme toppled when Siddiqui left spreadsheets on his desk outlining the payments and alleged kickbacks.
The spreadsheets were discovered by another Fry's executive while Siddiqui was away from the office. The other unnamed executive took the spreadsheets and turned them over to authorities. After receiving the spreadsheets, the IRS looked into Siddiqui's bank records and found evidence that a total of $167.8 million had been deposited into the shell company's accounts. The five Fry's suppliers had made a total of 70 wire transfers into the accounts totaling $65.6 million. The suppliers were not named as defendants in the case.
Siddiqui is a Palo Alto resident and the judge in the case has given the government 20 days to file formal charges of wire-fraud against Siddiqui, which prosecutors say they plan to do.
quote: What ever happened to ethics and responsibility (to others, Ed)?
quote: but I will blame the government (both parties) for failing to regulate properly