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Judge: Not Available.
Court: United States District Court for the Northern District of California (San Francisco County)
Plaintiff's Attorney: United States Attorney’s Office in San Francisco
Description: San Francisco, California criminal defense lawyers represented Defendant charged with wire fraud, money laundering, and related charges for their respective roles in two separate fraudulent schemes involving kickbacks and the diversion of millions of dollars of rebates belonging to Williams Sonoma, Inc., announced United States Attorney Ismail J. Ramsey and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Darren Lian.
while employed by Williams Sonoma, Inc. (WSI), Marsiglia was involved in two fraudulent schemes. The first scheme was a conspiracy to divert rebates from commercial real estate brokers that should have gone to WSI; the rebates were diverted to accounts that Marsiglia controlled. As part of this scheme, Marsiglia allegedly paid a portion of the diverted funds to his co-conspirators, Kourosh Mirmehdi, 63, of Irvine, Calif., and Alizo. The second scheme involved the payment of kickbacks in exchange for Marsiglia directing business to companies controlled by codefendant Michael Podhurst, 63, of Union, New Jersey.
“Today’s arrests target a years-long fraud centered on defendant Marsiglia, who abused the trust placed in him by a prominent San Francisco public company,” said U.S. Attorney Ramsey. “The indictment alleges how each defendant, in separate ways, sought to capitalize on Marsiglia’s valued position within the company—but all with the singular goal of lining their own pockets with millions of dollars at the expense of his employer. Rest assured, we will prosecute corporate executives who accept kickbacks and bribes in exchange for steering contracts to undeserving individuals or companies.”
“This investigation and today’s arrests are a result of the hard work and dedication of IRS Criminal Investigation and the U.S. Attorney’s Office in Northern District of California. Our agents and prosecutors pursued a group of individuals, across state lines, who took advantage of members of our community for greed and personal enrichment,” said Special Agent in Charge Darren Lian of IRS Criminal Investigation’s Oakland Field Office. “CI special agents are determined to hold those who deceive and cheat accountable for their actions.”
Williams Sonoma, Inc. (WSI) is a home-goods retailer that operates brands Williams Sonoma, Pottery Barn, West Elm, and others. Marsiglia was WSI’s Vice President of Engineering, Projects, Planning, Facilities, and Real Estate, and, as such, was responsible for identifying commercial real estate opportunities for the company. For example, Marsiglia located warehouses that WSI could use as distribution centers, worked with landlords and commercial real estate brokers to negotiate the terms of leases, and outfitted warehouses and distribution centers. In his position, Marsiglia allegedly orchestrated the negotiation of real estate contracts on behalf of WSI that required third parties to pay millions of dollars in brokerage fee rebates to WSI. According to the indictment, rather than ensure that WSI received the brokerage fee rebates, Marsiglia instead created a shell company and then conspired with others to have the rebates paid to his company. In addition, as part of this scheme, Marsiglia allegedly paid a portion of the proceeds of this illegal scheme to his co-conspirators. Separately, Marsiglia also allegedly received kickback payments from another co-conspirator in exchange for directing contracts for business to companies controlled by the co-conspirator.
The indictment describes details of the alleged rebate diversion scheme. According to the indictment, around 2020 WSI experienced an increase in its need for warehouse space to enable it to more easily store products and ship them to consumers around the country. To meet this need, WSI worked with third-party logistics companies to assist in the negotiations with commercial real estate brokers. Marsiglia allegedly worked with codefendant Mirmehdi, who worked for a global third-party logistics company, to assist in the negotiations with commercial real estate brokers and landlords. The indictment describes how a common feature of such leasing arrangements includes the payment of rebates from the real estate brokers to the entity leasing the warehouse space. The indictment alleges Marsiglia and Mirmehdi used their positions and influence to formulate contracts and/or agreements that directed commercial real estate brokers to forward rebate payments to Marsiglia’s company, rather than to WSI. Specifically, Marsiglia created, owned, and operated a shell company named REM Group LLC. Marsiglia or Mirmehdi then allegedly represented to real estate brokers that REM Group was connected to or a part of WSI, inducing the brokers to pay rebates to REM Group. Marsiglia allegedly thereafter sent portions of the illegal proceeds of the scheme to codefendants Mirmehdi and Alizo, who was Mirmehdi’s boss at the logistics company. Marsiglia, Mirmehdi, and Alizo redirected broker fees to REM Group for warehouses leased to WSI in Florida, New Jersey, and Arizona, and attempted to do so for an additional warehouse being leased in California. In total, the indictment alleges Marsiglia, Mirmehdi, and Alizo diverted and misappropriated approximately $5.9 million in broker commission rebates owed to WSI.
The indictment also provides details of the kickback scheme. In his role at WSI, Marsiglia had authority to identify vendors and authorize and approve contracts for work to be done in the distribution centers. According to the indictment, beginning in 2018, Marsiglia worked with Podhurst to arrange for kickback payments to be paid to Marsiglia and REM Group in exchange for Marsiglia directing contracts for business in WSI’s warehouses to companies connected to Podhurst. Podhurst worked as a salesperson at a forklift and supply chain company (the Forklift Company) based in New Jersey. The indictment alleges Marsiglia and Podhurst first agreed that Marsiglia would hire the Forklift Company to provide goods or services for Williams Sonoma; in exchange, Marsiglia established REM Group as a consultant and the Forklift Company made kickback payments to REM Group. This kickback scheme continued when Podhurst and others founded a storage and material handling company to provide and build racking systems in WSI warehouses. Later, Podhurst started his own company, Precision Industrial Installations, and Marsiglia awarded contracts to that company in exchange for more kickbacks.
In total, WSI awarded companies connected to Podhurst more than $48 million in contracts for work done at warehouses around the country, and Marsiglia and Podhurst arranged for more than $12 million in kickbacks to be paid to Marsiglia’s company, REM Group.
The indictment alleges that from approximately 2018-2022, Marsiglia received nearly $20 million through his shell company, REM Group, all of which was in the form of stolen broker rebate payments or kickbacks received for awarding business to entities related to Podhurst.
In sum, the defendants were charged with the following counts:
18 U.S.C. § 1349 – Conspiracy to Commit Wire Fraud
18 U.S.C. § 1343 – Wire Fraud
18 U.S.C. §§ 1343, 1346, 1349 - Conspiracy to Commit Wire Fraud and Honest Services Wire Fraud
18 U.S.C. §§ 1343, 1346 – Wire Fraud and Honest Services Wire Fraud
18 U.S.C. § 1956(h) – Money Laundering Conspiracy
18 U.S.C. § 1956(h) – Money Laundering Conspiracy
Marsiglia made his initial appearance this morning in U.S. District Court for the Northern District of Mississippi. An initial appearance in federal court in San Francisco has not yet been scheduled. Alizo made his initial appearance this morning in federal court in the Southern District of Florida. An initial appearance in federal court in San Francisco has not yet been scheduled. Mirmehdi and Podhurst have not yet appeared in federal court for their initial appearance.
An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, if appropriate, for each violation of 18 U.S.C. §§ 1343, 1346, and 1349, as well as a maximum sentence of 20 years in prison, and a fine of $500,000, plus restitution, if appropriate, for each violation of 18 U.S.C. §1956(h). The court also may order an additional term of supervised release to begin after a prison term as part of any sentence. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Ross Weingarten and Christiaan Highsmith are prosecuting the case with the assistance of Elizabeth Kim. The prosecution is the result of an investigation by the IRS-CI.
Outcome: Being indicted is not proof of guilt.