Former Gillette Executive Indicted For Taking Kickbacks From Gillette Vendors

PRESS RELEASEUnited States Department of JusticeApril 11, 2003 Boston, MA -- The former Director of the Permanent Merchandising Systems Department at Gillette was indicted yesterday on fifteen counts of mail fraud and wire fraud, along with one count of money laundering. He was arrested this morning by law enforcement officials and appeared in federal court today.United States Attorney Michael J. Sullivan; Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England, and Joseph A. Galasso, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced that Gino De Luca, age 46, of 16 Lamplighter Lane, Walpole, was indicted yesterday for mail fraud and wire fraud, and money laundering for defrauding his former employer, The Gillette Company ("Gillette"). From 1996 to August of 2002, De Luca was the Director of the Permanent Merchandising Systems Department ("PMSD") at Gillette. This unit was responsible for the promotion and display of Gillette grooming products, such as razors, Duracell batteries and Braun/oral care products, within various retail establishments. Gillette, which terminated De Luca in August 2002, brought this matter to the attention of federal law enforcement and has cooperated fully in this investigation. According to the Indictment, over the last four years De Luca has received close to $600,000 in kickbacks from vendors to whom De Luca steered lucrative Gillette business. The kickbacks ranged from small items such as electronic equipment, cameras, and vacations to big ticket items such as a car, an addition on De Luca's Walpole home, half interest in a condominium in Scottsdale, Arizona and $225,000 wired to a Swiss bank account. "It is important for the public to understand that this case is the result of individual greed and not corporate misconduct," stated U.S. Attorney Sullivan. "The Gillette Company through its own internal investigation identified the alleged fraud and brought this conduct to the attention of federal authorities and were fully supportive of the criminal investigation. This is an indictment of one individual who enriched himself through illegal means." The Indictment details allegations concerning De Luca's relationship with four vendors: Top Marketing, MGM Graphics, Interesting Display and Ideas, Inc., and Dascal and Associates. The vendors are alleged to have received a combined $15 million worth of business from De Luca in 2001 and 2002. According to the Indictment, De Luca controlled the distribution of $30 to $40 million in annual contracts. De Luca instructed his subordinates to select the vendors who were paying kickbacks to De Luca and he ignored quality issues that were raised about these vendors, according to the Indictment.The Indictment alleges that De Luca pressured one vendor, Top Marketing, to buy him over $15,000 worth of small dollar items, such as stereo equipment, cameras, appliances, televisions, exercise equipment, mother's day gifts, clothes and a variety of other retail products. As time passed, De Luca began demanding more money from Top Marketing in 2001 and 2002, the Indictment alleges. First, the owner of Top Marketing, at De Luca's insistence, paid $25,400 to a Worcester car dealership for De Luca's new Isuzu Trooper, the indictment charges. The Indictment alleges that later, the owner of Top Marketing had more than $225,000 wired to a Swiss bank account controlled by De Luca. According to the Indictment, De Luca instructed another vendor, MGM Graphics, to prepare and submit false and inflated invoices to Gillette which De Luca then approved for payment. De Luca then instructed the vendor, according to the Indictment, to send De Luca $40,000 in a series of five $8,000 checks, which De Luca deposited into his bank account. According to the Indictment, De Luca used this money for a down payment on a Scottsdale, Arizona condominium. This down payment forms the basis of the money laundering charge. The Indictment alleges that the owner of MGM Graphics was also forced to pay over $4,000 for an Aruba vacation De Luca took with his wife in January 2001.The Indictment alleges that another vendor, Interesting Display and Ideas, Inc., ("IDI"), paid over $30,000 for the construction of an addition on De Luca's home. The Indictment also alleges that the owner of IDI also paid the entire $269,430 for another Scottsdale, Arizona condominium that is jointly owned by him and De Luca. The Indictment also details a host of other gifts that these vendors made to De Luca to keep their business with Gillette. Following his arrest this morning, De Luca appeared today in federal court before Magistrate Judge Lawrence P. Cohen. De Luca remains in federal custody pending a detention hearing scheduled for April 14, 2003 at 2:00 pm. If convicted, De Luca faces up to 5 years' imprisonment and a $250,000 fine on each of the fifteen counts of mail and wire fraud. He faces up to 10 years' imprisonment and a $250,000 fine on the money laundering charge. The government is also seeking criminal forfeiture of De Luca's Walpole home, his two condominiums in Scottsdale, Arizona and his 2001 Isuzu Trooper. The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Joshua S. Levy in Sullivan's Economic Crimes Unit.Press Contact: Samantha Martin, (617) 748-3139United States Department of JusticeMichael J. SullivanU.S. AttorneyDistrict of Massachusetts United States Attorney's OfficeJohn Joseph Moakley U.S. Courthouse1 Courthouse Way, Suite 9200Boston, MA 02210Press Office: (617) 748-3139

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