Former CEO of Shelton Company Admits Embezzling $1.7 Million

The United States Attorney for the District of Connecticut announced that KEVIN COLEMAN, 51, of Waseca, Minn., waived his right to indictment and pleaded guilty today before United States District Judge Stefan R. Underhill in Bridgeport to one count of wire fraud and one count of tax evasion stemming from his embezzlement of approximately $1.7 million from his former employer, and his failure to file federal tax returns for four years.

According to court documents and statements made in court, from approximately November 2005 to December 2010, COLEMAN was employed at Latex International in Shelton, Conn., as its Chief Executive Officer. From approximately October 2008 to November 2010, COLEMAN and Joanne Osmolik, who served as the company’s vice president for human resources, embezzled more than $3.4 million in corporate funds to pay personal expenses. As part of the scheme, COLEMAN and Osmolik charged substantial personal expenditures on corporate credit cards.

The investigation of this matter has revealed that COLEMAN used a corporate credit card of a Latex International subsidiary to charge hundreds of thousands of dollars in diamond jewelry at a Minnesota jeweler, tens of thousands of dollars at Harley Davidson, and hundreds of thousands of dollars at other merchants. COLEMAN also directed Osmolik to charge personal items to the corporate American Express card of another employee in order to conceal their expenses from the company’s finance department. These expenses included tens of thousands of dollars in personal travel for COLEMAN and his family.

COLEMAN also instructed Osmolik to destroy company records so as to conceal their fraudulent nature from others at Latex International. Osmolik carried out those instructions and destroyed the records.

Through this scheme, COLEMAN embezzled approximately $1.7 million from Latex International.

In addition, COLEMAN failed to file federal income tax returns for the 2007 though 2010 tax years. During these four years, in addition to his embezzled income, COLEMAN earned a total $1,585,128 in wages from Latex International, resulting in a tax loss to the government of $741,029.

Judge Underhill has scheduled sentencing for May 4, 2012, at which time COLEMAN faces a maximum term of imprisonment of 25 years and a fine of up to approximately $3.5 million. COLEMAN also will be ordered to pay full restitution to Latex International, and restitution to the Internal Revenue Service in the amount of $1,375,627.83, which consists of the tax loss of $741,029, plus penalties and interest.

On December 20, 2011, Osmolik, of Newtown, Conn., pleaded guilty to one count of wire fraud stemming from this scheme. She has admitted that she charged more than $1 million in personal expenses on the corporate American Express card that was assigned to her, and received an additional $531,655 in fraudulent expense report payments from the company. She awaits sentencing.

This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service—Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Eric J. Glover.