Five Charged in $4M Rug Scheme

Boston, MA, April 3, 2007--Five men have been charged with stealing more than $4 million from Building 19 stores, using a scheme that involved sending incomplete rug orders to a New Bedford warehouse, where an inside man would certify that a full shipment was received, according to the Standard-Times.

The newspaper reported that David Adams, 43, of Wilmington and Tyrone Williams, 41, of Dartmouth were arraigned on charges of larceny by false pretenses and conspiracy to commit larceny yesterday in Taunton Superior Court. The men are former employees of International Floor Craft, a Building 19 subsidiary responsible for stocking the discount stores' flooring sections.

Three rug suppliers involved in the conspiracy will be arraigned at a later date, according to the state Attorney General's Office.

Authorities say the scheme lasted nearly a decade before it was detected in 2005, when Building 19 went to the Attorney General's Office with a report of suspected employee theft. State police and the attorney general's investigators followed the case for nearly two years.

Building 19 is divided into many separate companies, each of which manages a specific department within the stores, prosecutors said. In 1996, Mr. Adams began placing rug orders to three suppliers: Chinese Carpet Company Inc., Dalton Padding and Empire Rug.

The suppliers would deliver only a portion of the ordered rugs — or none at all — to Building 19's New Bedford warehouse. Mr. Williams, who worked at the warehouse, would sign off on a full shipment's arrival, then sent paperwork documenting the shipment to IFC's accounts payable department, prosecutors said.

IFC would then pay for the full shipment and those involved with the scam would split the proceeds.

Investigators said the co-conspirators included the owners of the three suppliers, David Sun, 46, and Paul Sun, 50, both of Fairfax Station, Va., and Michael Brown, 63, of Dalton, Ga., an agent for their companies. All three have been charged in the case and are due to be arraigned on the same counts as Mr. Adams and Mr. Williams.

A third IFC employee, now deceased, was also involved with the theft, but the Attorney General's Office declined to release a name or the employee's role, saying he or she was never actually charged.

Mr. Adams was held yesterday on $4,000 cash bail and Mr. Williams was held on $1,000 cash bail.

Outside of court, John Darrell, Mr. Adams' attorney, said he was still learning details of the case.

"I don't know how profits were split up. I don't know how it was run," he said. "I only met the man this morning."

He said court testimony indicated that Mr. Williams may have admitted his role in the case to authorities, but his client did not.

"He specifically said he spoke to them and he specifically said, 'I wasn't involved with anything,'" Mr. Darrell said.

He said Mr. Adams' family is going through a period of financial hardship.

"They're going to try to get some money together" for bail, he said. "They're already going through the process of bankruptcy."

Building 19 has been a family-owned business for more than 40 years and operates 15 stores, 11 of which are in Massachusetts. The company has a store in New Bedford at 19 Hathaway Road and a warehouse at 1 King St. Building 19 is headquartered in Hingham.