N.Y. Church Purchasing Agents; Wash. Man Sentenced

Three former purchasing representatives for the Archdiocese of New York were sentenced to more than two years in prison for bilking the archdiocese out of more than $2 million.   According to the Department of Justice, the trio used their positions as employees and consultants at Institutional Commodity Services Inc., the purchasing arm of the archdiocese, to defraud the client from 1996 until 2004. In addition to jail time, the three were ordered to pay $2.25 million in restitution.   Former ICS general manager Vincent Heintz, was sentenced to the longest term -- 80 months in prison -- for organizing a scheme requiring archdiocese vendors to pay a fourth defendant “commissions” worth more than $1.2 million and later making false statements to federal investigators.   That defendant, Joseph J. DeRusso, will be sentenced in November, and was charged with the returning the commissions back to Heintz and two other ICS employees. Former operations manager Michael J. O’Shaughnessey was sentenced to 41 months in prison and former food services director Nanette Melera received a 37-month prison sentence.   In addition, Heintz, O’Shaughnessy, Melera and DeRusso embezzled an additional $1 million from the archdiocese by steering orders for food for the children enrolled in the archdiocese’s schools to companies they secretly owned and controlled.   Heintz and DeRusso also conspired to defraud the Internal Revenue Service by arranging for DeRusso to receive at least $250,000 in cash from a vendor of milk and juice, which DeRusso failed to report as income.   The arrests resulted from an ongoing investigation of food distributors and suppliers of other goods and services to various not-for-profit entities in the New York metropolitan area.   Separately, a Tacoma, Wash., man was sentenced to three years in prison for promoting a tax scheme. The man, Michael Joseph Shanahan, was also ordered to pay $8.5 million in restitution to the Internal Revenue Service, equal to the tax loss to the federal Treasury he generated.   Shanahan pleaded guilty to conspiring to defraud the United States and failing to file a 1999 income tax return in February. Between 1994 and 2000, Shanahan and an associate assisted hundreds of taxpayers in forming and operating “pure equity trusts.” Shanahan falsely advised customers that they could avoid paying income taxes if they placed their income and assets into the trusts. According to evidence introduced at trial, Shanahan and his associate received more than $2 million in revenue from the sales of more than 400 of the trust packages.