Federal fraud charges levied in connection with $5 million VR Labs grant
Three individuals tied to VR Laboratories have been indicted on federal fraud charges in connection with a $5 million grant obtained from Lee County for a manufacturing facility that was never completed.
Acting United States Attorney W. Stephen Muldrow on Monday announced the unsealing of an indictment charging Kay F. Gow, 66, of Naples; Robert T. Gow, 75, of Naples; and John G. Williams, Jr. 65, of Virginia Beach, Virginia with conspiracy to commit wire fraud and money laundering, wire fraud, and illegal monetary transactions, according to a statement issued by the U.S. Attorney’s Office, Middle District.
“If convicted on all counts, the Gows each face a maximum penalty of 45 years in federal prison, and Williams faces a maximum penalty of 25 years in federal prison,” the release states. “The indictment also notifies the defendants that the United States intends to forfeit over $5.1 million, that is alleged to be traceable proceeds of the offenses.”
The three were schedule to make their initial appearances at 3 p.m. before United States Magistrate Judge Carol Mirando.
The release states that the Gows owned and controlled multiple entities, including HerbalScience Group, LLC and HerbalScience Singapore Pte, Ltd. They formed VR Laboratories, LLC in 2010 to apply for a $5 million grant from Lee County through its Financial Incentives for Recruiting Strategic Targets program, taxpayer funds earmarked to bring economic development projects to area.
The VR Labs grant agreement called for an initial investment into the planned facility as well as the investment of an additional $9 million in “qualified capital investments” by Sept. 1, 2013, and the creation of 208 jobs with an average annual wage of $66,850 by Dec. 31, 2016.
These things failed to transpire and Lee County grant money was diverted from its intended use, the indictment states.
“It was further a part of the conspiracy that conspirators would and did cause Lee County to transmit to VR Labs approximately $4,694,548.04 of FIRST incentive program grant funds for QCis allegedly expended by or on behalf of VR Labs to build the manufacturing facility, when in fact, VR Labs invested no funds in QCis other than the FIRST incentive grant funds, created no jobs in accordance with the FIRST incentive award agreement, and the VR Labs manufacturing facility was never completed or operational.”
The release issued by the U.S. Attorney’s Office provided a summary of the allegations contained in the 40-page indictment:
“In seeking the award, the Gows made numerous false and fraudulent representations to various individuals and government entities about their financial success and that of HerbalScience and VR Labs, including that VR Labs was poised to become a leading global formulator and manufacturer of botanical pharmaceuticals. Ultimately, Lee County awarded VR Labs $5 million in FIRST incentive program funds to build a manufacturing facility that the Gows had claimed would bring hundreds of high-paying jobs and economic growth to Lee County.
“Once VR Labs executed an agreement with Lee County, Williams, a long-time friend of the Gows, registered a fictitious name, ‘Williams Specialty Bottling Equipment,’ with the Florida Secretary of State. The Gows then represented that Williams would provide the bottling line for the manufacturing facility when he had no such experience or expertise. Williams used false and fraudulent invoices for work and services allegedly performed on the bottling line to make demands for payment and, once paid, kicked back a substantial portion of the funds to VR Labs and the Gows. The Gows then used Williams’s false and fraudulent invoices to justify requests to Lee County for the payment of the grant money. Once VR Labs received the grant funds, the Gows fraudulently transferred those funds to entities they owned and controlled, and ultimately to themselves, by disguising the transfers as fees, salaries, expenses, and other items. They also tried to conceal the source of the kickbacks through the creation of fictitious entities and documents. Ultimately, Lee County disbursed approximately $4.7 million in FIRST incentive grant funds to VR Labs, but the manufacturing facility was never completed or operational.”
This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorney Josephine W. Thomas, officials said.
Source: Office of the U.S. Attorney, Middle District