RIVERSIDE, California – A Utah man was arraigned in federal court today on a grand jury indictment alleging that he participated in a long-running scheme in which he sent fake invoices on behalf of a shell company to defraud an organic produce distributor out of $5.8 million.
Kevin Scott Horton, 55, of Saratoga Springs, Utah, is charged with seven counts of mail fraud. He pleaded not guilty to the charges today in Riverside federal court and a March 28 trial date in United States District Court in Los Angeles was scheduled in this matter.
According to the indictment and other court documents, from February 2000 to April 2018, Horton schemed with Tony Anhtuan Rawlings, 56, of Garden Grove, the management information systems director at Melissa’s World Variety Produce Inc., a Vernon-based company, to defraud Melissa’s out of its money through the approval of payment of invoices for fictitious services.
In February 2000, Horton allegedly created a shell company called Creative Network Solutions (CNS). At Rawlings’s instruction, Horton allegedly created one or two fictitious invoices per month, in which CNS billed Melissa’s for services that CNS did not provide.
Horton provided the fictitious invoices to Rawlings, who approved them and then provided them to a Melissa’s executive who ensured that Melissa’s paid CNS the amounts listed on the sham invoices, the indictment alleges.
Rawlings falsely represented to Melissa’s executives that CNS provided information technology and information systems services to Melissa’s. In fact, Horton had no background in computers and CNS never provided services to Melissa’s or any other company, the indictment states.
Horton, along with Rawlings, allegedly caused Melissa’s to send CNS payment in the form of checks mailed through the United States Postal Service. Horton allegedly deposited the checks he received through the scheme into a bank account that he controlled. Horton allegedly provided Rawlings a portion of the money that Melissa’s paid to CNS in the form of checks sent via U.S. Mail to an address in Irvine that Rawlings controlled.
In total, Horton, along with Rawlings, allegedly caused Melissa’s to pay CNS approximately $5,805,504 because of the fictitious invoices.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Horton would face a statutory maximum sentence of 20 years in federal prison for each mail fraud count.
Rawlings pleaded guilty in August 2022 to one count of mail fraud. His sentencing hearing is scheduled for June 1.
The FBI investigated this matter.
Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office is prosecuting this case.
