116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS - A New Hampshire man will plead guilty next week in federal court for his involvement in a book vendor scheme with a former bookstore director at Clarke University in Dubuque.
Thomas DeFelice is charged with one count of conspiracy to file false tax returns. He faces up to five years in prison and a fine up to $250,000. He is set for an initial appearance, arraignment and guilty plea next Tuesday, March 31 in U.S. District Court.
According to the superseding information, DeFelice and former bookstore director, James Spaulding, 35, now of Longmont, Colo., formed a fictitious New Hampshire corporation called RVP Wholesale Books in 2011. Spaulding was in charge of ordering textbooks and other books for the student bookstore, and would submit invoices to the college for payment to book suppliers.
Spaulding would create and submit fake invoices from RVP to Clarke, which caused the college to send checks totaling over $300,000 for book payments that were never delivered, according to the information.
Spaulding told DeFelice that he actually purchased books and delivered them to the college for sale, and even provided DeFelice with documentation of the sales.
DeFelice prepared and filed tax returns for RVP and himself, according to the information. DeFelice participated in the scheme between February 2012 and through April 2013. Both men agreed to inflate the costs of the books sold on the RVP tax returns and then reported a reduced share of income for themselves as shareholders.
According to the plea agreement, DeFelice would deposit the Clarke money into the accounts and then send Spaulding his share in a cashier's check. Spaulding then deposited his funds into his personal bank account at Dubuque Bank and Trust.
Included in the plea agreement are several fraudulent invoices or transactions created by Spaulding for various amounts in 2011 and 2012. One invoice, dated Sept. 2, 2011, is for over $47,000, and another invoice from Dec. 21, 2012 is for over $53,000.
RVP reported $21,044 in taxable income for 2011 and reported a loss of $9,363 for 2012, according to the plea agreement. There were no real costs of books sold or any other legitimate deductions. On their personal tax returns, DeFelice and Spaulding reported taxable partnership income from RVP of $10,522 for 2011 and a loss of $4,681 in 2012, according to the plea agreement. Their actual taxable income in 2011 and 2012 would have resulted in tax due of over $84,000.
Spaulding pleaded guilty to one count of mail fraud and two counts of filing false tax returns last December. He faces up to 26 years in prison plus two fines up to $550,000. His sentencing is set for next Monday, March 30.