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Construction VP Guilty in Fraud Scheme

Tuesday, August 18, 2015

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A former executive of a large St. Louis-based construction company has been found guilty in a scheme to use corporate funds to pay for personal expenses.

Brian Paluch, 58, of Kirkwood, MO, was convicted by a federal jury Aug. 11 following a six-day trial on three counts of mail fraud, according to Richard Callahan, the U.S. Attorney of the Eastern District of Missouri. Sentencing is set for Nov. 30.

St. Louis Skyline
© /  alex grichenko

The victim in the case was Paric Construction Corp., headquartered in St. Louis. The company provides general contracting, construction management and design-build services to various clients throughout the country.

Paluch served as the former chief financial officer and senior vice president of Paric Construction. The company, founded in 1979, is one of the largest privately held companies in the Midwest, providing general contracting, construction management and design-build services to various clients.

Paric provided assistance in the investigation.

Paluch faces a maximum of 20 years in prison and/or fines up to $250,000 on each count, according to the U.S. Attorney’s office.  

4-Year Scheme

From 2010 to 2014, prosecutors said Paluch used his company-issued American Express card to pay for personal expenses, including personal travel; spa charges; dining; electronics; and personal gifts for family and friends.

To conceal his scheme, Paluch doctored paperwork and submitted false and altered financial summaries of the monthly credit card statements.

Moreover, on several occasions, prosecutors alleged that Paluch forged the Paric president’s signature on these false reports as purported authorization for the payments.

Country Club Sham

Additionally, as part of his employment at Paric, Paluch was permitted to join the Sunset Country Club in St. Louis. Paric paid the monthly membership dues.

Paluch, on behalf of the company, entered into an agreement with Sunset for the purchase of various types of apparel and golf items containing the Paric corporate logo.

country club
© / Chris Boswell

Paluch reportedly created fake country club invoices to pay for personal items at a country club unrelated to the construction business.

However, prosecutors say Paluch created fake country club invoices to pay for personal items at the club unrelated to the legitimate business of Paric.

Inflation and Incentive

In his position as CFO, Paluch was also responsible for calculating the annual bonuses for the company’s employees, including his own.

Prosecutors said he inflated his base salary in calculating his own annual bonus for several years.

Additionally, during the summer of 2011, Paluch directed the payment of $5,000 in corporate funds to a St. Louis-area law firm as an incentive for the firm to hire his niece as a summer associate.

Paric did not respond Monday (Aug. 17) to a request for comment on the case.

Reports said Paluch joined Paric in 2005 and was dismissed in February 2014.

The U.S. Attorney’s office said the case was a joint investigation by the Postal Inspection Service, the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation.


Tagged categories: Business management; Business matters; Contractors; Criminal acts; Ethics; Fraud; General contractors; Good Technical Practice; North America

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