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General Employment Enterprises Inc. (NYSE MKT: JOB) hired Friedman LLP to audit its financial statements, dropping BDO USA LLC, according to a filing last week with the U.S. Securities and Exchange Commission. The move came after a disagreement over fees and time frame for a report into the company’s financial affiliation with Wilber Anthony Huff. Federal authorities filed an indictment against Huff on Oct. 1 claiming fraudulent schemes that totaled more than $100 million.
Huff, a Kentucky businessman, and two others allegedly stole $2.3 million from General Employment in a move to cover up another fraudulent transaction at Park Avenue Bank in New York, according to the U.S. Attorney’s Office for the Southern District of New York. The two others involved were Charles Antonucci Sr. and Matthew Morris. Antonucci was president and CEO of Park Avenue Bank and Morris is the former senior vice president of the bank.
Morris was named in the indictment filed on Oct. 1, according to the U.S. Attorney's Office. Antonucci pleaded guilty to securities fraud-related charges in 2010.
General Employment was a depositor at Park Avenue Bank, and Antonucci and others created a counterfeit certificate of deposit to make it appear that General Employment’s $2.3 million was in a 90-day CD when it was not, according to the U.S. Attorney’s Office. Instead the money was transferred into an account controlled by Antonucci.
The General Employment incident was just one scheme Huff was alleged to be involved with, according to the U.S. Attorney’s Office.
Huff controlled O2HR, a professional employer organization, from 2008 through 2010. While there, he allegedly took $53 million in taxes owed to the IRS and $5 million in owed to a workers’ comp insurer, according to the U.S. Attorney’s Office. The money was diverted to fund unrelated business ventures and to pay for personal expenses for Huff and his family members.
Manhattan U.S. Attorney Preet Bharara described Huff as, based on the allegations, “a vortex of fraud.”
According to the U.S. Attorney’s Office allegation, Huff, Morris and Antonucci from 2007 to 2009, did the following:
- Provided fraudulent letters of credit for Huff to present to an investor.
- Allowed Huff organizations to accrue $9 million in overdrafts.
- Facilitated bank transfers in furtherance of frauds.
- Fraudulently issued at least $4.5 million in loans to Huff-controlled entities.
The U.S. Attorney’s Office also alleges Huff, Antonucci, Morris and Allen Reichman (a former executive director of investments at an investment bank) fraudulently convinced Oklahoma insurance regulators to allow Antonucci to buy the assets of the Oklahoma-based insurance company that was owed $5 million by O2HR. The insurance firm later became insolvent.