Man Pleads Guilty To Construction Escrow Fraud

Howard A. Sperling of San Diego pleaded guilty in federal district court to conspiracy to commit wire fraud for his part in a scheme to defraud a California construction firm of nearly $13 million. According to the information presented in court, from August 2003 through January 2004, Sperling and his co-defendants conspired to defraud Cornell Corrections of California, a private company that operates corrections facilities for various governmental units. In June of 2003, Cornell Corrections contracted to have a corrections facility built in Canon City, Colo., for $13 million. The $13 million purchase price was to be held in an escrow account until the facility was completed. In August 2003, Sperling and his co-defendants induced Cornell Corrections to transfer its $13 million to an account in Atlanta controlled by co-defendant, Edgar J. Beaudreault, by falsely representing to Cornell that the account was an escrow account that was administered by a reputable bank. Upon receipt of Cornell Corrections' $13 million, Sperling and his co-defendants, Beaudreault and Robert B. Surles, wire transferred the majority of Cornell's $13 million to other accounts to be used for their own purposes. Most of the money was disbursed to the accounts of the three co-conspirators. Sperling withdrew $365,000 in cash, transferred $400,000 to personal and family members' accounts, paid $215,000 to banks and credit card companies, $85,000 to a Harrah's Casino and $60,000 for a luxury Mercedes Benz automobile. Sentencing is scheduled for April 30, 2009, before U.S. District Judge Clarence Cooper. Beaudreault pleaded guilty in December 2008 and is scheduled to be sentenced on March 18, 2009. Mr. Surles awaits trial and was unavailable for comment.