This week, Acting United States Attorney Louis D. Lappen announced that James D. Falkowski of Buffalo, New York was charged with eleven counts of wire fraud, eleven counts of mail fraud and a single count of conspiracy. The indictment was unsealed today. The indictment details Falkowski’s time working as QVC Director. The defendant was responsible for enhancing the company’s brand and reputation in the fashion and entertainment industries.
During that time, it is alleged that Falkowski carried out a multi-layered fraud scheme, which allowed him to live a luxury lifestyle. Falkowski is accused of using various methods to fraudulently acquire over $1 million worth of money, goods and services from QVC without the company’s knowledge or approval.
It is alleged that Falkowski fraudulently convinced QVC to pay hundreds of thousands of dollars for his personal expenses, including first-class travel, resort stays, spa treatments, luxury clothing, and even Botox treatment. $200,000 was used for private chauffeur rides, $70,000 for personal vendors and creditors, and $28,000 in payments to a custom furniture maker. Finally, it is alleged that Falkowski swindled QVC out of $59,500 in pre-paid gift cards.
The defendant is also accused of engaging in fraudulent kickback schemes with two separate QVC vendors. The vendors paid the defendant roughly $240,000. Falkowski is accused of abusing the company’s product requisition process to shower his friends with tens of thousands of dollars in products.
The indictment details Falkowski’s move to convince QVC to hire the Los Angeles-based PR firm, The Steinberg Group. Then, Falkowski allegedly used TSG to launder substantial amounts of money. The defendant encouraged TSG to reimburse him directly for his personal expenses. Subsequently, TSG would send fraudulent invoices to QVC. The invoices were often written by Falkowski or at his request.
This often led to QVC paying the defendant multiple times for a single expense. Falkowski is also accused of submitting fake invoices and bills in an attempt to hide his true costs from QVC. He is accused of using a second vendor, SPEC Entertainment, to alter invoices sent to QVC in another attempt to conceal his actions. The indictment alleged that the defendant engaged in fraudulent kickback arrangements with both companies. Falkowski instructed TSG how to become a vendor representative with QVC and how to earn royalties. He did so while working against his employer.
In return, TSG was able to acquire a larger royalty percentage over a longer period of time. For his part, Falkowski was made a silent partner and given a 50% cut on all royalty payments received from QVC. TSG, which conducted business as “Domain Miami LLC”, earned hundreds of thousands of dollars from QVC. Nearly $161,000 was kicked back to Falkowski for his part in the deal.
Falkwoski negotiated a similar deal with SPEC. However, with SPEC, Falkowski was only a one-third partner. His work with SPEC allegedly earned him $81,571.23 in kickbacks. Should Falkowski be convicted on all charges, he could be sentenced to a maximum of 135 months in prison with three years of supervised release. He will face a possible fine and a $2,300 special assessment. The court may also order restitution. Falkowski remains innocent until proven guilty.