Two local men are among three suspects indicted on first-degree conspiracy and money-laundering charges for allegedly defrauding five freight brokers out of $2.6 million through an elaborate shipping scam.
Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced the indictment against Kulwinder Dhaliwal Singh, 43, of Monroe, Fazal Din, 49, of Dayton, and Rajendra Patel, 54, of Jersey City. The June 29 indictment also brought charges against the men’s companies, National Freight, doing business in Dayton as PRP Enterprises; National Freight Solutions, also of Dayton; Diamond Freight Solutions, of Edison; Golden Star Express Corp., also known as Prime Time Freight, of North Brunswick; and PRP Enterprises, a motor carrier in Jersey City.
In addition, all three men, Din’s wife Rahila Khan, 42, and Singh’s wife Neelam Tibrewal, 38, are charged with failure to file a New Jersey gross income tax return, a third-degree offense. All of the defendants are fugitives and are being sought on arrest warrants issued in connection with the indictment, according to Dow’s office.
“We allege that these defendants had their own companies on both sides of fraudulent shipping transactions, with unsuspecting freight brokers caught in the middle,” Dow said. “They allegedly ripped off the brokers both coming and going to the tune of $2.6 million.”
“We charge that this was a complicated scam that involved over a thousand transactions and millions of dollars,” Taylor said.
Freight brokerage companies are paid a fee for serving as “middle men” between companies that need freight moved and carriers that agree to move the freight. They arrange for shipment of goods, collect payment from the company shipping the goods, and pay the carrier that moves the goods. Such brokers will extend credit to companies that regularly ship goods through them. The defendants allegedly ran a scam similar to what is known as a “bust out,” in which they built up a line of credit with the brokers and then used that credit to defraud the brokers, authorities said.
What was unusual about this scheme, Dow’s office said, was that the defendants engaged in transactions in which one of their companies, either Prime Time Freight or Diamond Freight Solutions, contracted with the freight broker to ship goods from California to New Jersey, and another one of their companies, PRP Enterprises, responded to the Internet job notice posted by the broker and was hired as the freight carrier that moved the goods. The brokers were unaware of the connection between the companies involved in the transactions. Because of the line of credit, the broker would pay PRP before the broker was paid by Prime Time or Diamond Freight. The defendants initially gained the confidence of the brokers and built up a line of credit by moving some actual freight using independent drivers and major freight carriers. But PRP eventually stopped moving actual freight, while continuing to submit and be paid for fictitious invoices with falsified supporting documentation, according to the allegations. Prime Time and Diamond Freight allegedly contracted with the brokers for a total of 1,217 shipments.
Din, Patel and Singh allegedly laundered the illicit proceeds of the scheme through a complex scheme involving moving money between their companies and making payments to relatives and other individuals to whom they had ties, authorities said.
Part of the money paid to PRP by the five freight brokers was transferred through a series of transactions to Prime Time and Diamond Freight and ultimately used by those companies to, in essence, pay the brokers with their own money. However, ultimately, Prime Time and Diamond Freight allegedly failed to pay $2.6 million that they owed to the five freight brokers. The brokers paid approximately $3.9 million to PRP. They received only about $2.1 million in payments from Prime Time and Diamond Freight out of the total of about $4.7 million that the two companies owed under their contracts.
The first-degree charges of conspiracy and money laundering carry a maximum sentence of 20 years in state prison and a $200,000 fine. The money-laundering charges carry an enhanced fine of $500,000 plus an additional anti-money-laundering profiteering penalty of $500,000.
The indictment was handed up to state Superior Court Judge Pedro J. Jimenez Jr. in Mercer County, who assigned the case to Hudson County.