NEWARK, N.J. – Two owners of a Bergen County company today admitted their roles in a scheme to deprive the U.S. Postal Service (USPS) of over $3 million in revenue through fraudulently altering postage labels, U.S. Attorney Philip R. Sellinger announced.
Jack Koch, 44, of Elmwood Park, New Jersey, and Steven Koch, 43, of Pompton Lakes, New Jersey, each pleaded guilty before U.S. District Judge William J. Martini to separate informations charging them with mail fraud.
According to the documents filed in this case and statements made in court:
The Kochs owned Fresh N Clear LLC, a company that sold various household items online, including bottled water, and shipped goods to its customers via the United States Postal Service. From January 2020 through September 2020, the defendants deprived the USPS of approximately $3 million in postage revenue through purchasing Flat Rate Envelope postage labels and wrongfully removing the Flat Rate endorsement on the envelopes so they could ship Fresh N Clear’s merchandise in boxes without paying the appropriate postage rate. The defendants purchased Flat Rate Service postage labels and altered those labels by electronically removing the endorsement from the label that confirmed that the package qualified for the Flat Rate Service. After removing the endorsement from the labels, the defendants re-applied the altered labels to packages that did not qualify for the Flat Rate Service and which would have otherwise required higher postage rates. Fresh N Clear then shipped those packages to its customers.
The mail fraud charge to which each defendant pleaded guilty carries a maximum penalty of 20 years in prison and a maximum fine of $250,000 or twice the gross gain to the defendant or gross loss to the victim, whichever is greatest. Sentencing for both defendants is scheduled for July 19, 2022.
U.S. Attorney Sellinger credited postal inspectors of the U.S. Postal Inspection Service, Newark Division, under the direction of Acting Inspector in Charge Raimundo Marrero, with the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorneys Perry Farhat and Katherine Romano of the U.S. Attorney’s Office’s Government Fraud Unit in Newark.