CAMDEN, N.J. -- A South Philadelphia accountant is the latest person to be charged in the Tri-State Armored Services scheme involving millions of dollars and thousands of ATMs, according to a report in the Philadelphia Inquirer.
Dennis C. Kelley, the 52-year-old owner of Meridian Accounting Service Corp., was arrested following a grand jury indictment on Aug. 15 for conspiracy to defraud a bank.
According to the indictment, Tri-State Armored Services retained Kelley to doctor the company's 1998 and 1999 financial statements. Then, the indictment says, Tri-State used those statements in a successful bid to get a service contract for First Union National Bank's ATMs.
Tri-State, based in Hammonton, N.J., is accused of embezzling millions of dollars intended to replenish 3,000 ATMs in the Northeast. Employees are also believed to have stolen millions in so-called residuals, cash left in ATMs.
At an Aug. 16 court hearing, U.S. Attorney Norv McAndrew said Tri-State had a bona fide audit performed. Then it gave the books to Kelley, who doctored the records to help Tri-State attract business.
First Union says it is missing $606,000 -- small change compared with the losses that other Tri-State customers have reported. Summit Bank, for instance, has estimated its losses at $25 million.
Court documents filed since Tri-State declared bankruptcy in March 2001 show a $33 million gap between what banks and other customers say they are owed and how much has been recovered.
Five former executives, all New Jersey and Pennsylvania residents, are in jail, on probation or awaiting sentencing.
Barry J. Chesla, 45, of Ligonier, Pa., who founded the company, is serving five years. William A. Mottin, 46, former president of the company, is serving three years.
A woman who laundered money through her bridal boutique received probation for agreeing to testify against Chesla, whom prosecutors say she met through an Atlantic City escort service. She and a Philadelphia man took suitcases of cash from Chesla at rest stops on the Pennsylvania Turnpike, according to court documents.
All pleaded guilty to charges including fraud, embezzlement and money laundering. (See related stories Tri-State principal pleads guilty to money laundering, tax evasion; Former Tri-State Armored Services CEO held on money laundering, bank fraud charges; More details emerge in Tri-State case; Another former Tri-State official pleads guilty to fraud charges)
In U.S. District Court yesterday, Kelley's lawyer argued that the accountant was "clearly a minor player in the conspiracy." Kelley was released on $1,000 bond, and was ordered confined to his home and prohibited from working on financial statements and tax returns.
In 1988, Kelley was sentenced to six months' probation for forging the signature of a client on a tax rebate check. Charged a year later in a separate incident for tax fraud, he spent six months in the federal prison in Allenwood, Pa.
Kelley -- who is not a certified public accountant -- was depicted yesterday as a man living above his means.
Although he and his wife have declared bankruptcy four times, McAndrew pointed out that they own a $600,000 house in Haddonfield, N.J. Property tax records also show they own a $206,400 property in Wildwood Crest, N.J.
"I don't know how he can have a home like that, given the income and bankruptcies of he and his wife," U.S. Magistrate Robert B. Kugler said. "It doesn't add up."
