Palisades Park Pharmaceutical CEO Charged with Embezzlement of $3.9 Million

ALPINE, NJ - MAY 18: (EXCLUSIVE COVERAGE) John Klein (L) and Lenora Klein attend the 2016 Peace, Love & A Cure Triple Negative Breast Cancer Foundation Benefit on May 15, 2016 in Alpine, New Jersey. (Photo by Mike Coppola/Getty Images)

NEWARK, N.J. – The former chief executive officer and owner of a pharmaceutical company was arrested this morning for embezzling millions of dollars from the company, Acting U.S. Attorney Rachael A. Honig announced.

John Klein, 75, of Palisades Park, New Jersey, is charged by complaint with one count of wire fraud. Klein is scheduled to appear by videoconference today before U.S. Magistrate Judge Michael A. Hammer.

According to the documents filed in this case and statements made in court:

Klein was the majority shareholder and CEO of a pharmaceutical company. In July 2016, Klein hired as a chief financial officer an individual who created a profit and loss statement showing the pharmaceutical company’s sales and corresponding receivables. According to that individual, Klein provided information that included an account receivable of approximately $3.9 million from a customer that had not been collected. In December 2016 and January 2017, the pharmaceutical company, with Klein’s knowledge and approval, put a reserve against the uncollected receivable in the financial statements.

Klein controlled and used a pre-existing pharmaceutical company bank account. A review of that account revealed that approximately $3.9 million was transferred into the bank account in May 2016. In a June 2016 email, Klein acknowledged that the invoices related to the approximately $3.9 million had been paid in full. A review of the company bank account also showed that following the wire transfers of approximately $3.9 million, Klein made numerous personal expenditures out of the account, including credit card payments for himself and his wife, payment of property taxes, and tuition payments for his child’s private school.

The charge of wire fraud is punishable by a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross profits or twice the gross loss suffered by the victims of his offense, whichever is greatest.

Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Anthony Torntore and Andrew Kogan of the U.S. Attorney’s Office Cybercrime Unit in Newark.

The charges and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.

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3 COMMENTS

  1. And, as usual in advanced age persona,age will be taken into account (75). He’ll get a slap on the wrist, promise to never do it again, and maybe, just maybe, have to pay it back.

  2. Isn’t it his money. If he owns the company it’s his money. The infernal revenuers are probably gonna be getting a big chunk of his wife’s alimony. They don’t like tax free transfers of funds

  3. Isn’t it his money. If he owns the company it’s his money. The infernal revenuers are probably gonna be getting a big chunk of his wife’s alimony. They don’t like tax free transfers of funds

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