Attorneys and Fraud and Government & Economic Development and U.S. District Court and Government and Law

Grifter gets 19 months for fraud that hit Indy firms

April 30, 2013

A New York businesswoman who pleaded guilty to defrauding corporations out of millions of dollars will spend 19 months in prison and serve one year of supervised release, according to a sentence handed down Tuesday by a federal judge.

Dina Wein Reis has already paid $7 million in restitution, of which $1 million will go to Indianapolis-based Roche Diagnostics Corp. and $180,000 to Clabber Girl, which is owned by Terre Haute-based Hulman & Co.

Wein ReisDina Wein Reis

Reis, 49, had pleaded guilty to fraud nearly two years ago, agreeing to serve up to 31 months in prison, but her sentencing had been delayed while she auctioned her art collection at Sotheby’s and sold other assets in order to pay the restitution.

The gallery in Judge Jane Magnus-Stinson's courtroom was filled by 18 of Reis’ friends, rabbis, counselors and family members. They huddled around a downcast Reis in the hallway outside the courtroom after the sentencing.

Reis gave an emotional speech in the courtroom, asking Magnus-Stinson to convert her prison sentence into probation. Reis described how her arrest at her Manhattan townhouse in October 2008 caused her to “hit bottom” and transform her life.

She said she reconnected with her husband and three kids, the youngest of whom is 13, according to Reis’ attorney Richard Kiefer. Reis also said she has spent her time taking care of her ailing father, who has Alzheimer’s disease, and her mother, who has had two broken hips.

Reis also has hosted people in her home—the homeless, mentally ill, battered women, and other people with business ethics challenges. Some of her work has been through the Osborne Association, a New York-based organization that works to help criminals change by serving others.

Elizabeth Gaynes, executive director of the Osborne Association, was in the court gallery on Tuesday.

“I had to take a look at myself, and what I saw, I hated,” Reis said in a slow speech, during which she took many long pauses. She added, “The person who stands in front of you today is not the person of 4½ years ago. I’m grateful for that.”

Kiefer, Reis’ attorney, also made a lengthy argument to Magnus-Stinson that Reis’ transformed life, her family’s need for her care and her extraordinarily large restitution payment justified a sentence of probation without incarceration.
 
But Magnus-Stinson disagreed. She said due to the nature of Reis’ crimes, justice required at least some prison time. Magnus-Stinson shaved one year from the maximum 31-month prison sentence, converting that time into supervised release, with a nod to Reis’ exemplary conduct since her arrest.

But, she added, “There was an elaborate scheme. The four years of good conduct in the meantime is not enough to wash it out.”

Reis’ fraud involved fooling major corporations—from Procter & Gamble to Unilever—into selling products to her at huge discounts. She then resold them at large profits.

Documents filed by the U.S. Attorney’s office in Indianapolis claimed that Reis and co-conspirators told the companies they would donate the goods to not-for-profits for promotional purposes or would use them in boxes of free samples to be handed out at schools, military bases and other hard-to-reach markets.

If the sampling program proved successful, the firms were told, the products would gain access to these elusive markets through Reis’ “National Distribution Program,” according to the investigation led by the Indianapolis office of the FBI.

“The defendants strongly implied to the executives that if their companies did business with Reis, their companies’ products would enjoy the almost exclusive presence in Reis’ supposed vast network of retail outlets,” according to the seven-count indictment unsealed three years ago.

In fact, however, there was no National Distribution Program, and Reis and her associates instead sold the goods to wholesalers and retailers for a large profit, prosecutors charged.

Indianapolis-based Roche Diagnostics alleged in a 2007 lawsuit that Reis bilked it out of $10 million in diabetes-testing equipment. Reis’ restitution will return only one-tenth of that amount. However, Roche also settled its own 2007 civil suit against Reis for undisclosed terms.

Reis’ restitution payments will also send the following amounts to these companies: $500,000 to Kansas City-based Bon Ami Faultless Starch, more than $1.5 million to Kentucky-based Ashland Inc., and more than $2 million to Unilever.

Another $1 million will go to the U.S. government.

Court records showed that another Indianapolis firm, DowBrands, maker of Saran Wrap and other household products, became entangled with Reis before its $1.2 billion sale to Wisconsin-based S.C. Johnson & Son Inc. in 1998. However, neither DowBrands nor S.C. Johnson were named Tuesday as recipients of restitution payments.

Prosecutors said Reis and her associates used audacious tactics to get a foot in the door with marketing executives at some of the nation’s largest companies. Typically, the first contact came from someone who claimed to be an executive recruiter, expressing interest in hiring the executive at a multimillion-dollar salary.

Kiefer, Reis’ attorney, tried again on Tuesday to argue that some of those individuals knew what Reis and her team were doing, and went along with it in hopes of a lucrative job or sales deal.

But Magnus-Stinson waved off that argument Tuesday, saying, “This sounds a bit like, ‘All the kids are doing it,’ and that’s not what I’m here to adjudicate.”

Magnus-Stinson recommended that Reis serve her prison term at Camp Danbury in southwestern Connecticut. She also recommended that Reis continue mental health treatment to address severe panic attacks and depression that she has suffered since her arrest.
 

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