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Foresthill man pleads guilty to Raley’s fraud

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From page A3 | May 03, 2013 | Leave Comment

A Foresthill man pleaded guilty in federal court Tuesday on charges of conspiracy to commit mail and wire fraud.

Jason Allen Smith, 47, schemed to defraud Raley’s Family of Fine Stores, U.S. Attorney Benjamin B. Wagner announced in a press release. A former contract employee, Smith conspired with Raley’s former Director of Advertising David John Magana; Martin Steward Cullenward, 60, of Cool; and others.

Smith, the press release stated, took part in two of Magana’s fraud schemes. In total, Magana’s schemes cost Raley’s more than $2.5 million. Both Cullenward and Magana have previously pleaded guilty and an investigation is ongoing.

In order to receive the funds, the plea agreement stated, Smith used Advantage Paper Inc., a company he legally created prior to the fraud scheme.

Smith and Magana used the company to sell paper to Raley’s at an inflated price. Proceeds were placed in the company’s bank account and split between the two men, who would occasionally meet to discuss how much money Raley’s would ultimately pay for the paper. Smith would also pay Magana in cash or pay the other man’s bills.

Magana would also allow Smith and Cullenward to resell some of the paper not used by Raley’s, selling for it a fraction of the price Raley’s paid. Proceeds went to Smith and Cullenward with kickbacks to Magana.

U.S. District Judge John A. Mendez is scheduled to sentence Smith on Sept. 10. Smith faces a maximum of 20 years in prison; a $250,000 fine or twice the gross gain or loss, whichever is greater; and three years of supervised release.

This case was investigated by the FBI and the IRS’ Criminal Investigation division. Assistant U.S. Attorney Michael M. Beckwith prosecuted the case.

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