The United States is asking for an upward variance in the sentencing of Theodore Nicholas Papouloglou in Richmond on February 20.
The current calculated guideline range for his sentencing is 21 to 27 months in his federal evasion of income tax assessments and conspiracy to transfer, receive, conceal and sell stolen goods case, which is related to stolen catalytic converters.
United States Attorney Erik S. Siebert argues for an upward sentence of 57 months for the Roanoke Rapids man in a January 30 sentencing memorandum.
‘Actions were particularly insidious’
In laying out his argument for the upward variance, Siebert writes that Papouloglou’s company, DG Auto South, was the mid-Atlantic component of an organized crime ring for catalytic converters. “Papouloglou’s criminal conduct incentivized thieves to cut and steal catalytic converters from the automobiles of innocent people, thereby perpetuating the black market for stolen automobile parts in Central Virginia and elsewhere.”
The attorney contends in the memo that Papouloglou’s actions “were particularly insidious because they added further economic stress to consumers at precisely the time that the nation was reeling from the COVID-19 pandemic and facing supply chain issues that raised the costs to replace stolen automobile parts.”
In all likelihood, Papouloglou’s crimes hurt hundreds, if not thousands, of people, the document says.
Papouloglou is unique also in the variety of ways he chose to profit from the black market for catalytic converters:
By directly buying, selling, and transporting stolen catalytic converters from the thieves
By facilitating bulk cash payments to other sellers of stolen catalytic converters
By hiding income from the IRS associated with his illicit catalytic converter activity
“After being confronted with wrongdoing by law enforcement, Papouloglou did not immediately accept responsibility and surrender ill-gotten gains. Rather, he transferred assets purchased with his scrap metal business to family,” Siebert said. “Papouloglou surely needs specific deterrence; however, general deterrence is also a key driver. The court must send a message that those who seek to profit off the backs of ordinary citizens for (selfishness) will be punished severely.”
This is especially true, the document says, because catalytic converter theft is difficult to detect and prosecute. “A serious sentence is necessary to deter future criminal activity and to communicate to Papouloglou that further criminal activity will result in escalating punishment.”
Beginning a ‘lucrative fraud’
Starting in 2020 through 2022, Papouloglou began a lucrative fraud, feeding a black market for stolen automotive car parts, catalytic converters, and helping thieves to profit from cutting these catalytic converters out of innocent citizens’ cars, the document says.
Papouloglou then transported those stolen catalytic converters to New Jersey and sold them to his co-conspirators. “Papouloglou’s crimes coincided with a swell of catalytic converter theft in the Richmond area and around the nation. Papouloglou further fueled the illicit catalytic converter theft wave around the country by facilitating millions of dollars of cash payments for bulk sellers of stolen catalytic converters. And while Papouloglou made millions from his illicit catalytic converter trade, he failed to pay taxes on his ill-gotten gains.”
Nature of the offense
Papouloglou’s catalytic converter crimes encompassed three main dimensions.
On or about November 2020, Papouloglou created a scrap metal business in Emporia, Virginia. He used the business to buy stolen catalytic converters from thieves, who unlawfully cut these catalytic converters from automobiles. “Conscious of the illicit nature of these transactions, Papouloglou did not pay fair market value for these catalytic converters; instead, he routinely applied discounts to the purchase prices for catalytic converters he knew were stolen.”
He would go on to resell in bulk the stolen catalytic converters to his co-conspirators in New Jersey for eventual shipment to a metal refinery in Japan.
Second, the memo says, “flush with money from his illicit business, Papouloglou lived extravagantly and indulged his whims. Among other things, Papouloglou gambled in Las Vegas and at the MGM Casino in Maryland, purchased real estate, and purchased a $28,000 luxury motorcycle for his girlfriend. And despite making over $15 million dollars in gross receipts and realizing income from the catalytic converter companies throughout 2020 and 2021, Papouloglou paid no income taxes either year, resulting in $465,325 due (conservatively calculated in Papouloglou’s favor).”
Indeed, the memo continues, “Papouloglou went to great lengths to defraud the IRS, including maintaining a double set of accounting records (one real and one fake) and by transferring funds among his business bank accounts to conceal and obfuscate true income and expenses. His willingness to defraud the IRS while running a broader criminal enterprise reflects the depth of his greed.”
Third, Papouloglou was central to the broader movement of money underpinning a nationwide black market for stolen catalytic converters. “Specifically, Papouloglou facilitated the transfer of money to other bulk sellers of stolen catalytic converters in exchange for their delivery of stolen catalytic converters to Papouloglou’s co-conspirators in New Jersey.”
Rather than paying the stolen catalytic converter sellers directly for the stolen car parts, according to the document, Papouloglou’s co-conspirators in New Jersey paid him via wire transfer so he could organize bulk cash deliveries to the stolen catalytic converter sellers.
In all, Papouloglou illicitly transferred at least $6,649,313 to facilitate these stolen catalytic converter sales, perpetuating an illicit black market that fueled more catalytic converter theft. “And Papouloglou took fees to organize these bulk cash transfers,” Siebert wrote. “The government is prepared to introduce testimony at sentencing that Papouloglou provided bulk cash in these transactions to assist co-conspirators with evading governmental scrutiny (and Papouloglou at minimum remained willfully blind to the same).”
Papouloglou voluntarily agreed to forfeit various luxury automobiles stemming from the fraud, which law enforcement had previously seized during a search warrant in 2022. However, this acceptance of responsibility is offset by Papouloglou’s efforts to conceal other assets after being given a target letter in late 2022. Specifically, on or about June 14, 2023, roughly six months after receiving a target letter in this case, Papouloglou sold his residence (valued at $187,000) to his sister for $0.
“On the balance, when considering the gravity of these offenses, a 57-month sentence is well-supported by these factors,” the document says.
History and characteristics of the defendant
According to the memo, Papouloglou is a zero-point offender, though he has a string of aged criminal convictions for which he received no criminal history points, including: Simple assault; failures to appear on five occasions; and failure to comply.
A New York native, Papouloglou was raised by his mother and stepfather in a rural and peaceful area. He was “loved and cared for” and “never abused as he grew,” this information coming from his presentence report. “The PSR reflects no childhood history of domestic violence or substance abuse.”
He has hematemesis, a condition causing him to cough up blood, gastritis, and acid reflux.
He has no history of mental or emotional health conditions and does not appear to presently suffer from substance abuse issues.
“Papouloglou comes before this court with advantages in his childhood and upbringing relative to many other defendants who frequently appear before this court,” the memo says. “As laid out above and in the PSR, nothing in the defendant’s history and characteristics mitigates or explains his commission of the instant offense; instead, the only explanation for his criminal conduct is unadulterated greed. A term of imprisonment of 57 months is well-supported by this factor.”
