Sylvania Man Charged with Mail and Wire Fraud Offenses

A federal grand jury in Cleveland returned a three-count indictment against Philip A. Cargnino, age 47, of Sylvania, Ohio charging conspiracy to commit mail fraud and wire fraud, one count of mail fraud, and one count of wire fraud, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today.

The charges stem from a scheme by RLUSA to defraud golf courses and leasing companies throughout the United States, according to the indictment. RLUSA was headquartered in Ohio and established by Cargnino and two co-conspirators Daniel Sandwisch and Robin Flaum (both previously charged and awaiting sentencing).

Cargnino was part owner of RLUSA, which marketed non-motorized golf carts to golf courses to serve as portable concession stands for the sale of beverages and snacks. Golf courses obtained the carts through lease agreements made with leasing companies, according to the indictment.

Under the scheme set forth in the indictment, all the leasing payments to be borne by the golf courses for the non-motorized carts were to be paid by RLUSA purportedly from their advertising revenue from national sponsors, who agreed to pay for advertising panels attached to the golf carts. The indictment further asserts that Cargnino, made false material statements and misrepresentations, including representing that RLUSA had agreements with Kellogg’s, Hershey Foods, Pringles, and V-8, as national sponsors, for these companies to provide to RLUSA funds for advertising in return for these companies paying RLUSA “monthly sponsorship revenue,” when, in fact, RLUSA had no such agreements.

Payments from these national companies were represented as providing the basis for a stream of revenue to the golf courses to absorb the full amount of the lease payments. RLUSA also represented that the monthly sponsorship revenue payments made to golf courses were guaranteed, and that the golf courses would “get the Nationally-Sponsored Beverage Caddy Express Free.” In fact, RLUSA’s payments to golf courses to cover the golf course’s lease payments were not guaranteed and the golf courses did not receive their cart for free as there was no advertising revenue to cover these expenses, according to the indictment.

Eventually, this scheme collapsed after RLUSA, Flaum, Sandwisch, and a co-conspirator sold thousands of beverage caddies to leasing companies and golf courses throughout the United States. Despite RLUSA’s assurances, the golf courses remained obligated under the terms of their leases for the golf carts which led to financial hardship for many of the affected golf courses, according to the indictment.

“Small business owners have enough challenges as it is, without dealing with schmes and scams designed to take their money,” Dettelbach said. “Our office is committed to detecting and stopping such conduct.”

If convicted, the sentence in this case will be determined by the court after consideration of the advisory Federal Sentencing Guidelines, which depend upon a number of factors unique to each case, including the defendant's prior criminal record, if any, the defendant's role in the offense and the unique characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The case is being prosecuted by Assistant United States Attorneys Robert J. Patton and Christian H. Stickan following investigation by the FBI in Youngstown, Ohio.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.