A moneymaking scheme hidden under the guise of a cheese company has one local facing more than a decade in federal prison and another awaiting his jail sentence.
Englewood Cliffs resident Mark Cocchiola, convicted of defrauding the government and investors of millions of dollars in a scheme to benefit him and his cheese company, was sentenced to 15 years in prison Thursday.
Cocchiola, 52, was ordered by a federal judge in Newark to pay back $115 million to investors and banks who bought shares of his former company, Paterson-based Suprema Specialties.
His partner, Steve Venechanos, 49, of New Milford, will be sentenced for the same crime April 7.
In April 2007, a federal jury convicted the pair of conspiring to defraud the Securities and Exchange Commission (SEC) and investors through fake bank accounts, wire and mail.
The convictions were the result of a three-year investigation by the FBI, the SEC and other federal agencies.
Cocchiola was the founder and former chief executive officer and Venechanos, the former chief finance officer of Suprema, once rated as one of the most profitable small companies in America.
Federal investigators presented evidence that from 2000 to 2002 the executives reported to the SEC that Suprema, a specialty Italian cheese maker, made $400 million in sales, causing the company’s publicly held stock shares to rise in value.
About 99 percent of the $400 million in sales "were entirely fictitious, with no product actually having been sold or shipped," according to investigators and the 38-count indictment from 2005.
In 2001 alone, Suprema reported $420 million in revenues, a 50 percent increase over the prior year, the indictment alleged.
Prosecutors claimed Cocchiola, Venechanos and other employees did it by forming a "circle" of fraud that included making fake sales to vendors and customers, all of whom profited from the phony cheese sales.
Fake paperwork, invoices and bills were created and those involved got kickbacks or commissions.
As a result, "Suprema’s fictitious accounts payable and inventory grew," the indictment said.
Cocchiola and Venechanos personally made more than $3 million after selling their shares in the seemingly profitable company, according to a release issued by U.S. Attorney Christopher Christie after the conviction.
The company’s criminal dealings surfaced when another manager abruptly resigned in 2001 and contacted authorities.
Suprema then filed for bankruptcy in 2002, causing banks and investors to lose more than $177 million in what they thought was real profit.
And, when the company did actually produce and sell cheese, it wasn’t as advertised.
Federal prosecutors alleged that the "all-natural" cheese was an imitation cheese product repackaged and relabeled as the real thing and sold at a higher price.
The company had about 300 employees.
According to the press release issued by Christie, Suprema was twice listed in Forbes magazine as one of the top 200 best small companies in America and made Fortune magazine’s list for one of the fastest growing public companies.
"These were corrupt businessmen," according to Christie.
"They bankrupted a company that was in reality a myth built on phony sales," he said. "They were driven by unbridled greed without a thought to the investors they charmed with their illusion of Suprema’s success."
