BRIDGEPORT, Conn. (WTNH) — The owner of Fairfield Food Services, LLC in Bridgeport pled guilty Wednesday to wire fraud for defrauding three restaurant groups of $3.5 millions, according to Deirdre M. Daily, United States Attorney for the District of Connecticut..
The owner, Mark Berlin, of Boca Raton, Florida, waived his right to be indicted and pled guilty in federal court to one count of wire fraud.
As owner and operator of his business, Berlin bought meat, fish, and other foods from wholesaler vendors and then sold the items to restaurants and retail food distributors. Berlin met with representatives for other distributors to pitch sale opportunities. Between April 2012 and April 2015, Berlin made various misrepresentations to secure the sales, including claiming that he had arrangements with wholesale suppliers to obtain future contracts from the wholesalers, and that the distributors could lock in low prices if they paid for the products in advance with deliveries at a later date.
Berlin told his retail victims that he had great deals on particular products and that the customers had to pay him as soon as possible to get the deals. He provided them with ‘bill and hold’ invoices purportedly reflecting specific monies to be paid to the wholesaler suppliers for products at the prices indicated. The victims then paid the ‘bill and hold’ invoices in full with an understanding that the products or futures contracts for products were being purchased from the suppliers.
Through investigation, it was revealed that Berlin did not have locked in prices, or futures contracts with wholesale suppliers. According to officials, Berlin often used retail victim’s payments to cover his business’s immediate cash flow needs. Instead of paying wholesalers before products were delivered, Berlin typically did not pay the wholesalers for 30 to 60 days after products were delivered.
By April 2015, Berlin was unable to keep the scheme afloat and stopped providing products to the retail victims. Shortly thereafter, Fairfield Food Services declared bankruptcy and closed its business. The Fairfield Food Services’ bankruptcy filing lists a total of approximately $5.3 million owed to three restaurant groups that paid Berlin in advance for products, and hundreds of thousands of dollars owed to wholesale suppliers for products for which Fairfield Food Services had already taken delivery.
In pleading guilty, Berlin contends that not all of the approximately $5.3 million owed to his retail victims was obtained by fraud. The government’s position is that Berlin obtained at least $3.5 million and as much as $5.3 million by fraud.
Berlin is scheduled to be sentenced by U.S. District Judge Stefan R. Underhill on August 25, 2017, at which time he faces a maximum term of imprisonment of 20 years.