Dr. Pepper Executive Sentenced for Fraud, Tax Evasion
PROVIDENCE, RI – A national sales executive for Dr. Pepper/Seven Up, Inc., a subsidiary of Dr. Pepper Snapple Group (Dr. Pepper), was sentenced today to 33 months in federal prison for submitting more than $1.7 million dollars worth of fraudulent invoices to Dr. Pepper through a promotions and marketing company he formed in his wife’s name.
In February, Michael Lynch, 53, of Newport, R.I., admitted to the Court that in April 2003, he incorporated Seacoast Unlimited Marketing and Promotions, LLC (Seacoast) in his wife’s name, and through Seacoast, from January 2007 until November 29, 2017, submitted to Dr. Pepper more than 200 fraudulent invoices totaling $1,716,949 for services such as promotional signs and banners, delivery of sample products to retail stores and the offering of discount prices to retail stores. None of the services billed to and paid for by Dr. Pepper were provided.
Additionally, Lynch admitted that he failed to declare any of the income he derived through Seacoast on the joint federal tax filings he filed with his wife. The tax loss applicable to the defendant’s conduct totals $386,320.
Lynch pleaded guilty on February 27, 2018, to wire fraud and filing a false tax return.
At sentencing, U.S. District Court Chief Judge William E. Smith also ordered Lynch to serve 2 years supervised release upon completion of his term of incarceration, to pay full restitution to Dr. Pepper, and to pay taxes owed to the Internal Revenue Service.
The U.S. Sentencing Guidelines range of imprisonment in this matter is 33 – 41 months. The government recommended the court impose a sentence of 33 months incarceration. Lynch’s sentence is announced by United States Attorney Stephen G. Dambruch, Special Agent in Charge of the FBI Boston Division Harold H. Shaw, and Special Agent in Charge of Internal Revenue Service Criminal Investigation Kristina O’Connell.
The matter, investigated by the FBI and by IRS Criminal Investigation, was prosecuted by Assistant U.S. Attorney Lee H. Vilker.