June 14, 2015
Two men charged in a scheme to defraud the University of Pennsylvania of $3 million by billing for services that were never provided to the Sheraton University Hotel pleaded guilty in Pennsylvania federal court on Wednesday.
Kenneth Kapickian, 57, and Dennis Gagliardi, 60, each were charged on May 26 with 7 counts of wire fraud and one count of conspiracy to commit money launderiing. According to court documents, the scheme took place between May 2008 and January 2014. Kapickian served as general manager of the hotel, which is owned by a subsidiary of the university, and Gagliardi was its chief engineer.
The defendants allegedly submitted fraudulent invoices for services from Cold Wash Zone, LLC, a business the pair created to take on equipment leases of a company installing hotel laundry machines. Those invoices totaled more than $2.5 million dollars. The defendants also allegedly instructed hotel vendors to inflate invoices and provide them with kickbacks.
According to The Daily Pennsylvanian, Kapickian pleaded guilty to 6 counts of wire fraud and one count of conspiracy to commit money laundering. Gagliardi pleaded guilty to 4 counts of wire fraud and one count of conspiracy to commit money laundering.
Kapickian faces a $7.8 million fine and up to 140 years in prison, while Gagliardi faces a potential $5.7 million fine and up to 100 years in prison. Both men will be sentenced on September 14.
The University of Pennsylvania said in a statement that no Penn employees were named in the charges or implicated in the criminal conduct. The university also plans to aggressively pursue the recovery of all losses incurred by the hotel.
The case was investigated by Homeland Security Investigations and prosecuted by Assistant U.S. Attorney Melanie Babb Wilmoth.
