Retirement Dashed for Swindled Printer —MichelsonMay 2010
ALBERT GEHLY, in his mid-70s, and his wife were just beginning to savor the fruits of their hard labor. After founding Bellow Falls, VT-based Vermont Graphics in 1973, the "snow birds" were enjoying his semi-retirement by escaping the cold Vermont winters at their second home in Florida. After all, they knew that their business was in the capable hands of their two children, Craig and Karen, who oversee prepress and production, and estimating/billing, respectively.
But, that all came to a crashing halt in October 2008 when Gehly—trying to determine why his company was losing money—first became suspicious of his part-time bookkeeper, Julie Garrow, who he had hired to balance the books (but not sign checks) 14 years prior. He contacted the FBI which, after a nearly year-long investigation, arrested Garrow for embezzling money from Vermont Graphics during that 14-year time frame. She was charged with stealing $607,739 (Gehly claims it was $711,000) by forging the signature on company checks made out to herself. None of the stolen money has been recovered.
After reaching a pre-trial settlement with prosecutors, Garrow plead guilty on April 28 to forgery and tax evasion. She has agreed to pay restitution of $607,739 to Vermont Graphics, as well as up to $81,000 to the IRS for unpaid taxes. Although the judge has the discretion to determine how much prison time Garrow will actually serve at her sentencing hearing on Sept. 13, Gehly says the U.S. Attorney prosecuting the case has already recommended a 24- to 36-month sentence as part of their plea agreement. Prosecutors also dropped the most serious charge she faced: one count of bank fraud, which carries a maximum $1 million fine and 30 years behind bars. "It seems like the perpetrator has all the (legal) rights," Gehly told me, in describing our justice system where a serious charge can be dropped just to avoid a trial. "She came into work every morning, smiled at everyone, and then proceeded to forge my daughter's signatures."
Gehly is rightly outraged at the light prison sentence Garrow now faces, and doubts he will ever see much restitution. Currently on bail and working in a kitchen at a nursing home, Garrow will encounter slim job opportunities when she is ultimately released from prison as a convicted felon. "It's a joke; even if she pays me $25 to $50 per week, it would take her hundreds of years," he notes. "This has been financially devastating to me, and you get to a point where you feel that you can't trust anyone anymore."
Gehly has been forced to return to work full-time at Vermont Graphics, and has rented out his Florida home. To keep the business afloat, he had to lay off five employees, including Garrow's husband, who also worked for the print shop. Gehly is convinced the husband was aware of the scam, but there was a lack of evidence to prosecute him. A Vermont Graphics employee approached Gehly afterwards, noting that the embezzlement explained how the Garrows could afford so many "toys" on their limited income, which reportedly included five ATVs and a new camper every other year. Gehly was able to put a $50,000 lien on some land—most likely acquired with his money in the first place—that the couple was in the process of selling after the forgery was detected. And, because the Garrows live in New Hampshire, Gehly has also racked up more than $10,000 in legal fees since he had to hire lawyers in Vermont and in New Hampshire.
Operating two Miller sheetfed perfectors, a five-unit Royal Zenith half-web, and a Muller Martini stitcher and perfect binder within a 30,000-square-foot facility, Vermont Graphics has survived past recessions since 1973. Coupled with the fraud, this one has been especially taxing, particularly after the New York-based trade magazines that the shop printed folded due to a lack of advertising. Now, Vermont Graphics is struggling to make ends meet primarily by printing flyers and other local commercial jobs.
As Gehly has unfortunately learned, it's a sad irony that white collar crime pays much better than printing and, based on the penalty of getting caught, also carries less risk.
Mark T. Michelson