Former executives get prison for nearly $2M defrauding of Arrow Electronics

A former vice president at Colorado-based Arrow Electronics and the CEO of a contractor have been sentenced to federal prison for defrauding Arrow, a global provider of technology services and components, of nearly $2 million. Michael Vergato, 52, who worked for Arrow, was sentenced to 46 months in prison. Mark Perlstein, 60, was sentenced to 25 months and fined $15,000. The U.S. Attorney’s Office for the District of Colorado said Monday that Vergato was convicted on six counts of wire fraud after a six-day trial in May. Perlstein pleaded guilty to wire fraud in June. The men were jointly ordered to make restitution of $1.94 million. Each will serve three years of supervised release after their prison terms. Authorities said according to Perlstein’s plea agreement and evidence presented at Vergato’s trial, the two devised a scheme to bill Arrow Electronics, based in Centennial, for performance tuning services. Vergato oversaw performance tuning of Arrow’s Oracle EBS data bases, including work by Perlstein’s company. Perlstein and Vergato billed the data management company for services purportedly done by a shell company created by Vergato. The company, Oracle Performance Tuning and Optimization, or OPTO, submitted 21 fraudulent contracts and invoices to Arrow for work that was never performed, according to authorities. Perlstein approved the invoices and wired payments to OPTO. Nearly $2 million in company funds were funneled to OPTO, authorities said. Perlstein and Vergato divided the proceeds and concealed their involvement by using personal email accounts, other corporate entities, and fake identities. Vergato used his stepdaughter’s identity to conduct business on behalf of OPTO, according to authorities. Tax records confirmed OPTO paid no salaries and issued no contractor forms. Vergato kept approximately $874,000 of the $1.94 million, spending it on luxury vehicles, credit card payments, retirement accounts, and rent. Perlstein personally received more than $1 million. “Corporate fraud of this magnitude undermines confidence in our business community and harms employees, customers, and shareholders alike,” said U.S.Attorney Peter McNeilly. “These sentences send a clear message: executives who abuse their authority for personal gain will be held accountable.” U.S. District Judge Nina Y. Wang presided over the sentencing. The FBI investigated the case. The prosecution was handled by assistant U.S attorneys Nicole Cassidy, Bradley Giles and Bob Brown. Get more business news by signing up for our Economy Now newsletter. Get more Colorado news by signing up for our daily Your Morning Dozen email newsletter.