Sikeston embezzlement case spawns civil lawsuit
Wednesday, November 23, 2011
A Sikeston, Mo., business tied up in an embezzlement case involving a Jackson man now finds itself in the middle of civil litigation over a dispute with a New Jersey-based textile company that's also involved in the embezzlement lawsuit.
In May, Cranbury, N.J.-based KT America Corp. filed a lawsuit against the Dewitt Co. alleging that the company owes KT America $938,125.45 for goods purchased from June to August 2010. The suit also asks the Dewitt Co. to pay 18 percent-a-year interest while repaying the amount.
The lawsuit stems from a criminal case that alleges former Dewitt employee Jason Mitchell appropriated money that belonged to the DeWitt Co. into his own bank account.
As an employee of DeWitt, Mitchell was directed by his employers to purchase materials for the company through KT America at the lowest possible price, according to the lawsuit. Mitchell allegedly collaborated with KT America employee Rajiv Toprani and kept purchasing items from the company at whatever price the two chose and received back into the fraudulent account a percentage of the purchase price. Mitchell allegedly "doctored the books" to cover up the kickbacks in exchange for a percentage of the money. The kickback varied according to what fabric was purchased and Toprani's profit margin, but averaged around 3 percent of the price.
Toprani and Mitchell were charged with felony stealing for participating in the alleged kickbacks. The two men received about $500,000 from the scheme.
The charges against Toprani were dropped in April after he agreed to testify against Mitchell.
KT America has sold more than $56 million in materials to DeWitt since 2001, and DeWitt does approximately $22 million in sales each year.
In the suit, KT America acknowledges doing business with Dewitt and mailing monthly invoices. Copies of the unpaid invoices are included in the case file.
Dewitt levied counterclaims against KT America, arguing that KT America knew of Toprani's alleged misdeeds and made "negligent and reckless representation for its own benefit and commercial gain."
As a result of the misrepresentation, Dewitt suffered damages "in amounts yet to be determined," according to the counterclaims.
In addition to the counterclaims against KT America, Dewitt filed petitions against Mitchell, Toprani and former Dewitt CEO Richard Potter alleging that the three conspired in the scheme. The petitions ask that the three men pay individual sums "fair and reasonable in excess of $500,000."
The parties involved in the lawsuit are set to appear in court Dec. 5. Mitchell will stand trial on his stealing charges Jan. 18.
101 Court St., Jackson, Mo.