Department of Justice: Executive's Guilty Plea Admits Pretext of Payment to Trade Show Vendor to Misappropriate Employer's Funds

The Department of Justice U.S. Attorney's Office, District of Maryland, announced this week that Malcomb C. Cork, age 55, of South Carolina, pleaded guilty to charges that he caused more than $187,000 to be diverted from his employer’s bank account. According to the announcement, Cork had told his company's CFO that the funds had been transferred to a trade show vendor but never produced an invoice to back up the transaction.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.

According to his plea agreement, from 2004 until mid-2012, Cork was the President of a Maryland company that distributed lawn and garden supplies.  Under the terms of his contract with the company, Cork also was permitted to operate a business he established called Medical Solutions, Inc. (MSI).  MSI executed a licensing agreement with Chemence LLC, a company that manufactured and distributed products, including a medical grade adhesive.  Under the agreement, MSI was required to pay Chemence $187,500 by July 1, 2011.  On that date, Cork wrote a check to Chemence for $187,500 drawn on his investment account, which was returned due to insufficient funds.

Cork admitted that on July 15, 2011, he directed subordinates to transfer $187,500 from the lawn and garden supply company’s operating account to an account in the name of Chemence LLC.  When the Chief Financial Officer (CFO) for the company, who was on vacation at the time of the funds transfer, returned and asked about the expenditure, Cork told the CFO that the funds were transferred to a trade show vendor with which the company was doing business.  Cork advised the CFO that he would obtain an invoice in support of the money transfer.  Despite repeated requests from the CFO, Cork never supplied an invoice to support the charge.  Eventually the company discovered that the payment was unrelated to its business and attempted—unsuccessfully—to recover the money.  Cork admitted that he knew he was not authorized to direct the funds transfer, but did so anyway for his own benefit.

Cork and the government have agreed that if the Court accepts the plea agreement Cork will be sentenced to no more than 15 months in prison. Chief U.S. District Judge Catherine C. Blake has scheduled his sentencing for February 29, 2016, at 9:00 a.m.

Today’s announcement is part of the efforts undertaken in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorneys P. Michael Cunningham and Aaron S. J. Zelinsky, who are prosecuting the case.