San Francisco, California - A federal grand jury indicted Geoffrey M. Palermo and Adan Roldan, aka George Villanuevo, charging the defendants with conspiracy in connection with an alleged plot to bilk a California company of more than $1.5 million as part of a kickback scheme, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The indictment adds to charges filed by the grand jury against Palermo in June of last year.
According to the indictment, Palermo, 57, of Novato, California, was working as the manager of a Hilton hotel located in downtown San Francisco between 2008 and 2016. During this timeframe, Palermo had authority to enter into contracts, choose contractors, and otherwise manage construction and capital improvement projects at the hotel. Further, between January 2013 and June 2016, Roldan, 53, was the owner of a construction company, A. Roldan Construction, that Palermo hired to perform various construction projects at the San Francisco Hilton. The indictment describes how Palermo arranged for the review and approval of millions of dollars of checks paid from Hilton’s owners to A. Roldan Construction based on invoices submitted by Roldan’s construction company.
According to the indictment, much of the billing dispensed by Roldan’s construction company to the Hilton was contained in fraudulent and inflated invoices. In addition, the indictment explains that Roldan allegedly created and submitted the false and fraudulent invoices as part of the scheme to conceal kickbacks to Palermo. Specifically, Palermo continued to hire Roldan to perform work at the Hilton and arranged to have the fraudulent invoices paid while Roldan arranged to kick back part of the funds to Palermo. The indictment alleges that between January 2013 and June 2016, Palermo authorized issuance and payment to Roldan’s construction company of more than 450 checks totaling approximately $6.4 million.
The indictment also describes how Palermo and Roldan used various bank accounts to carry out their scheme. Most prominently, Roldan maintained an account entitled “Bahama Reef Living Trust” from which he withdrew funds to make payments to various accounts controlled by Palermo. For example, the indictment describes how Roldan deposited four checks in October of 2015 totaling approximately $145,915 from the Hilton’s owners into the construction company bank account. On the same day, Roldan then allegedly transferred $125,000 from the construction company account into the Bahama Reef account and then, again on the same day, wrote a check for $125,000 from the Bahama Reef account to an account controlled by Palermo. The indictment estimates that by writing checks from the Bahama Reef account to various bank accounts controlled by Palermo, Roldan funneled to Palermo kickbacks totaling approximately $1,535,965.
The indictment filed against Palermo and Roldan charges each defendant with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349. The conspiracy charge carries a maximum statutory penalty of up to 20 years in prison and a $250,000 fine. These charges are in addition to a separate indictment against Palermo filed on June 30, 2020, in which he was charged with honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346; wire fraud, in violation of 18 U.S.C. § 1343; and making a false statement in a loan application to an FDIC-insured lender, in violation of 18 U.S.C. § 1014. The honest services fraud charges carry the same maximum penalties as the wire fraud charges and the false statement charge carries a maximum of 30 years in prison and a $1,000,000 fine. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the indictments are mere allegations. As in any criminal case, the defendants are presumed innocent unless and until proven guilty in a court of law.
The defendants are scheduled to make their initial appearances in federal court on May 13, 2021, before U.S. Magistrate Judge Thomas S. Hixson. The court will likely determine bond conditions at that time.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by the FBI.