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Fraudsters made a local panhandler president of a shell company to hide their scheme

Max de Haldevang
A scrapper heads toward a mountain of metal at a scrap yard in Milwaukee

A lawyer from Staten Island was handed a four-year sentence on Sept.9 for running a scrap-metal fraud that he tried to conceal by enlisting a blind panhandler to be president of a fraudulent shell company.

The lawyer, Richard Luthmann, had teamed up with a scrap-metal shipper and the son of an alleged New York crime family member to defraud potential customers, according to court documents. The scheme was rather simple: Find a customer, and either ship them no metal at all, or pad the containers with some metal and cheaper materials underneath it. “If there were any disgruntled victims, they could rely on [one conspirator’s] organized crime connections to help settle any disputes,” the indictment reads.

The trio ultimately defrauded victims out of hundreds of thousands of dollars, the indictment said.

Their first attempt at the scheme didn’t go well. Luthmann and his co-conspirator found a company in California that wanted scrap metal, contacted the firm using their real names and real bank accounts, and tried to pocket $31,500 from that company—without shipping anything at all. When the company threatened to sue, Luthmann reconsidered and decided to send it back, the indictment says.

After that failure, Luthmann came up with a new idea: Set up a shell company, with new bank accounts, and send victims at least a smattering of scrap metal, prosecutors said. He persuaded the blind man, whom he had found asking for money outside his office and subsequently brought on as a client, to be president of the company and have his name on the bank accounts. Luthmann told his partners that the client, named R.D. in court documents, “could not be sued because he was mentally handicapped and that if they were ever sued only his client would be liable,” according to prosecutors’ sentencing memo. This all amounted to identity theft, prosecutors alleged.

The conspirators eventually turned against each other. At one point, Luthmann “concocted” a story about Chinese gangsters demanding money from him, and asked the scrap-metal shipper to give him $23,000 so they could pay a New York mob enforcer to have a “sit-down” with them, the indictment says. Later, the enforcer and the mobster’s son tried to shake down the shipper for $10,000 more by pointing a pistol at his knee and head, the indictment says.

Luthmann’s lawyer said he was struggling with undiagnosed mental health issues and had been drinking heavily and using cocaine while running the scheme, according to the New York Post.

 

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