We Are Improving!

We hope that you'll find our new look appealing and the site easier to navigate than before. Please pardon any 404's that you may see, we're trying to tidy those up!  Should you find yourself on a 404 page please use the search feature in the navigation bar.  

User Rating: 5 / 5

Star ActiveStar ActiveStar ActiveStar ActiveStar Active
 

A Roanoke Rapids man has been indicted in the Eastern District of Virginia federal court system on four counts related to the illicit sales of catalytic converters.

The true bill of indictment was filed Tuesday, according to federal court records, and charges Theodore Nicholas Papouloglou in counts one and two with evasion of income tax assessments; in count three conspiracy to transfer, receive, conceal and sell stolen goods; and in count four operating an unlicensed money transmitting business.

Court documents show an arrest warrant for Papouloglou filed Tuesday was returned today.

As of this report court records do not show any dates for preliminary appearances.

The indictment says the Roanoke Rapids man in November of 2020 incorporated DG Auto South LLC in Emporia as a scrap metal business which routinely purchased and sold automotive parts, including catalytic converters. It also operated as a money transmission business in connection with the purchase and sale of catalytic converters.

In November of 2019 Papouloglou incorporated Strategic Converter & Cores, a limited liability company registered to his mother's address in Gaston, a company the indictment refers to as an alter ego of the Virginia business.

The indictment lists co-conspirators named in the document as CC-1, CC-2, CC-3, CC-4 and CC-5.

CC-2 is listed in the indictment as a business associate of Papouloglou who worked in the Emporia business.

CC-3 and CC-4 are Texas residents who bought stolen catalytic converters and resold them to CC-1. CC-1 is listed in the indictment as a New Jersey resident and operator of an unnamed catalytic converter bulk buying business located in Freehold which maintained an online software application that allowed buyers to price catalytic converters. 

CC-5 is an Oklahoma resident who bought stolen catalytic converters and resold them to CC-1.

IRS explanation of money transmission businesses

Under federal law, any person who owned or controlled a money transmitting business was required to register that business with the Department of Treasury. 

According to the Code of Virginia the operation of a business engaging in unlicensed money transmission without having acquired a license from the Commonwealth of Virginia was a prohibited act, punishable as a misdemeanor.

Neither Papouloglou or the catalytic converter businesses were registered as money transmitting businesses — either with the Department of Treasury or with the Commonwealth of Virginia.

Papouloglou paid for an active subscription with Garda Technical Services, a bulk cash delivery service.

Indictment’s background on catalytic converters

A catalytic converter is an exhaust emission control device that reduces the amount of toxic gas produced by motor vehicles. Catalytic converters have been mandated for all cars and trucks since 1975. Catalytic converters are located underneath the vehicle near the engine exhaust manifold. 

Catalytic converters contain valuable metals like platinum, palladium, and rhodium. “Some of these precious metals are more valuable per ounce than gold, and their value has been increasing in recent years,” the indictment says. “The black market price for catalytic converters can be above $1,000 each, depending on the type of vehicle with which the catalytic converter is compatible.”

Used catalytic converters are frequently taken to scrap metal businesses, where the valuable metals are removed and resold.

“Catalytic converters are an easy mark for thieves, in part, because they can be cut from a vehicle in a short amount of time — often less than a minute — with just a battery powered reciprocating saw, often without the need to put the vehicle on jacks,” the indictment says. “Once a catalytic converter is detached from its originating vehicle, it is difficult to trace, because catalytic converters are generally not marked with information sufficient to identify the originating vehicle.”

Removal of the catalytic converter often renders the vehicle undrivable.

Count one

In 2021, Strategic Converter received gross receipts, including proceeds from the illicit sale of catalytic converters amounting to at least $10,429,637. 

In 2021, DG Auto South received gross receipts, including proceeds from the illicit sale of catalytic converters amounting to at least $4,047,000. 

The aforementioned gross receipts from the catalytic converter businesses resulted in the generation of at least $568,306 in income to Papouloglou.

Papouloglou used the aforementioned wired funds to make at least the following purchases for his personal benefit:

On or about February 21, 2021, he purchased a real estate property in Roanoke Rapids for a total amount of $190,000 and thereafter lived at the property.

On or about June 4, 2021, and continuing through on or about November 8, 2021, he used catalytic converter business funds to gamble at the Aria and Bellagio casinos in Las Vegas and at the MGM National Harbor Casino in Oxon Hill, Maryland.

On or about June 18, 2021 he wired approximately $32,000 to a third party in Wake Forest for a personal expense: The purchase of a recreational land plot by Lake Gaston in North Carolina.

On or about July 16, 2021, he wired approximately $28,493 to a vendor to purchase a luxury motorcycle for his girlfriend.

On or about August 18, 2021, he purchased a real estate property in Roanoke Rapids with a $137,816 cashier's check. Although the property was titled in the name of DG Auto South, Papouloglou purchased the property to generate personal rental income for his own benefit.

The approximate tax due and owing resulting from the evasion of income tax assessment for 2021 is at least $169,059.

Affirmative acts of Evasion in 2021

Failed to file a 2021 IRS Form 1040 tax return, despite knowing of his obligation to file an individual income tax return.

Dealt extensively in cash, including paying his customers and employees in cash, to conceal and obfuscate his income and expenses.

Used nominee entities such as the catalytic converter businesses and transferred funds between and among the catalytic converter businesses' bank accounts to conceal and obfuscate his income and expenses.

Made extensive purchases for his own personal benefit from the catalytic converter businesses' bank accounts while failing to report to the IRS the associated income.

Maintained a double set of accounting records for his businesses in order to fraudulently reduce his tax liability — one set reflecting only payroll costs of $500 per employee per week in wages; and another set reflecting the remainder of cash wages paid to employees beyond $500 per week. 

On or about April 16, 2021 Papouloglou started using a payroll processor to make withholdings and file IRS Forms 941. 

For the quarters ending in June of 2021 and September of 2021, as he knew and intended, the payroll processor withheld employee taxes and filed IRS Forms 941 based only on the accounting records that reflected a total of $500 weekly wages paid to each employee. 

The material omissions of the true balance of employee wages to the payroll processor caused the payroll processor to underreport wages and withholdings of DG Auto South's employees to the IRS and to underpay taxes due.

Papouloglou instructed his accountant, who was based in the Eastern District of Virginia, to create another nominee entity, 301 Auto Parts LLC, so that he could further conceal and obfuscate his income and expenses.

Count two

In 2020, Strategic Converter received gross receipts, including the proceeds from the illicit sale of catalytic converters amounting to at least $1,795,431. 

On or about May 12, 2021, Papouloglou filed and caused to be filed with the IRS an individual income tax return for the tax year 2020. 

The Schedule C accompanying this Form 1040 reported DG Auto South as having gross receipts of $262,605 and total expenses in the amount of $273,672, resulting in a net loss to DG Auto South of $11,067. 

Concurrently, the Form 1040 underreported Strategic Converter's gross receipts as being only $157,187, with total expenses in the amount of $146,120, resulting in a net profit of $11,067. “However, as Papouloglou then and there well knew, the gross receipts figure he reported for Strategic Converter was false, as the business had at least $1,795,431 in gross receipts,” the indictment says. “By concealing the true gross receipts for Strategic Converter and by manipulating the net profit and net loss figures for the catalytic converter businesses to offset, Papouloglou was able to fraudulently report $0 in taxable income on his Schedule C. This ultimately caused Papouloglou to receive (an) $1,800 tax refund when, in fact (he) owed taxes to the IRS.”

The approximate tax due and owing resulting from the evasion of income tax assessment for 2020 was at least $296,266.

On or about May 12, 2021, Papouloglou did prepare — and cause to be prepared — sign, and file — and caused to be filed — with the IRS a false and fraudulent 2020 U.S. Individual Income Tax Return, IRS Form 1040, that substantially understated his total income and tax due and owing for tax year 2020. “Papouloglou substantially understated the gross receipts to Strategic Converter, resulting in (him) reporting a fraudulently decreased income.”

He reported having received no taxable income and no tax due in tax year 2020, resulting in him receiving an $1,800 tax refund for the year. “In truth and fact, as he well knew, Papouloglou concealed gross receipts of at least $1,375,639 in order to fraudulently reduce his tax liability.”

Count three

At least as early as 2020, and continuing until at least in or about November 2, 2022, Papouloglou knowingly and willfully conspired to commit certain offenses against the United States by receiving, possessing, concealing, storing, bartering, selling, and disposing of any goods, wares, and merchandise — namely, catalytic converters — of the value of $5,000 or more, which crossed a state boundary after being stolen.

The count also charges that they were transferred to locations in New Jersey and Japan while knowing they were stolen.

“The purpose of the conspiracy was for the defendant and his co-conspirators to unlawfully enrich themselves from the possession, concealment, storing, bartering, and sale of catalytic converters known to have been stolen; be valued at more than $5,000; and have crossed a state boundary after being stolen.”

The other purposes of the conspiracy were:

For the defendant and his co-conspirators to unlawfully enrich themselves from the transfer of catalytic converters across state boundaries knowing that such catalytic converters had been stolen; and were valued at more than $5,000.

For the defendant and his co-conspirators to conceal from governmental authorities their illicit sale, receipt, and transportation across state boundaries of stolen catalytic converters.

It was part of the conspiracy that the defendant held his business, DG Auto South LLC, to be involved in the business of buying catalytic converters, advertising on Facebook that he was "Looking (for) large volume customers that can bring volume — the larger the load the better the pay."

The defendant and co-conspirators received stolen catalytic converters in Emporia from thieves, who stole catalytic converters from personal vehicles outside of Virginia.

It was further part of the conspiracy that the defendant would routinely apply a discount to the purchase price for catalytic converters from thieves when he knew such catalytic converters were stolen. 

Oftentimes, this discount was up to 20 percent of the price quoted.

The defendant would conceal the purchase of these stolen catalytic converters by failing to report these purchases to LeadsOnline LLC or local law enforcement as required under Virginia law. 

It was further part of the conspiracy that the defendant, after purchasing stolen catalytic converters, would resell them to CC-1 and other bulk catalytic converter resellers. “Specifically, the defendant would load … the stolen catalytic converters into a truck; and transport them to bulk catalytic converter resellers for ultimate shipment … to Japan.

The bulk resellers would send money to Papouloglou.

Overt acts

The indictment notes that throughout August of 2022 there were numerous recorded conversations between Papouloglou, a confidential informant and undercover agent in which stolen catalytic converters were discussed, those conversations including the amount of discounts because the items were stolen.

Around August 30 of 2022 Papouloglou paid the undercover agent $16,130 in cash for the catalytic converters, which Papouloglou understood to have been stolen. Thereafter, Papouloglou and his co-conspirators transported these purportedly stolen catalytic converters across-state lines. 

On that same day the undercover agent asked Papouloglou, "What do you do when you break them down," to which he replied, "They get shipped to Japan."

The indictment charges that Papouloglou and his co-conspirators — including CC-2 — deliberately failed to record these transactions with LeadsOnline LLC, as required by Virginia law.

At various times, the indictment says, Papouloglou took actions to entice and reward catalytic converter sellers to patronize his business, including arranging prostitution services for visiting catalytic converter sellers from outside of Virginia who traveled to Emporia to sell catalytic converters and by arranging their lodging.

Through 2020 and 2021, Papouloglou received at least $17,138,637 in wired payments in exchange for, among other things, transporting and selling catalytic converters — including stolen catalytic converters — to the company in New Jersey.

Count four

At least as early as April 20, 2021, and continuing until at least on or about June 2, 2021,Papouloglou managed and owned an unlicensed money transmitting business.

It operated without an appropriate money transmitting license in Virginia and failed to comply with federal law concerning these businesses.

The total value of the funds that Papouloglou illicitly transferred was at least approximately $6,649,313.