Man gets 6-year term for embezzlement

Alrub defrauded Arbutus company of $4.6 million

November 01, 2005|By LYNN ANDERSON | LYNN ANDERSON,SUN REPORTER

A Baltimore man who pleaded guilty to defrauding an Arbutus furniture company of $4.6 million -- money he used to finance a number of businesses, including three bars, a liquor store and a health spa -- was sentenced to six years in prison and ordered to make full restitution to the family that owns the firm in federal court yesterday.

Islam Abu Alrub, 39, of Baltimore took the money from the David Edward Co. over seven years by illegally tapping into its corporate loans and bank accounts, according to federal prosecutors. Alrub, the firm's chief financial officer, used the money -- including nearly $2 million from a credit account with PNC Bank -- to support his own enterprises and those of his family and friends.

In announcing the sentence, U.S. District Judge J. Frederick Motz said he chose a harsher penalty than the one Alrub's defense attorney had requested because so many people had been hurt, including those who tried to help Alrub, a naturalized U.S. citizen who emigrated from Jordan in hopes of making a better life for his family.

"This was an embezzlement of the worst order," Motz said.

A victim statement submitted by the family that owns the furniture company detailed the devastating effects of Alrub's illegal acts, including a delay in expansion plans and a reduction in employee raises and profit-sharing programs. More than 200 employees signed a letter in which they asked the judge to give Alrub the longest prison sentence permissible.

"Our reputation, our own morale and sense of well-being, all of our hopes and plans for the future are spoiled by Mr. Alrub's carefully planned schemes," said Edward G. Pitts, the company chairman, and his sons Gregory A. Pitts, David E. Pitts and Kevin J. Pitts in their letter to Motz.

In a statement before the court, Alrub said he had apologized several times to his former employers and that he had tried to warn them of the pending financial problems. He said that at the time he committed the crimes he was not thinking straight because he was using drugs.

"This is what I call an American dream gone wrong," he said.

In their letter, the Pittses explained that they hired Alrub in 1991 to work in their warehouse and financially supported him in his efforts to get a master's degree so that they could promote him. They said they subsequently hired his father, brother and sister-in-law in an effort to help the family.

"We remain stunned by Alrub's totally unexpected betrayal of our trust," the family said.

Besides the loss of funds -- including more than $2.2 million from two PNC accounts; $1.29 million from a Provident Bank account; $550,000 from an M&T Bank account, and $159,149 from an American Express credit card account -- the company has also incurred nearly $600,000 in legal fees and has had to spend roughly $80,000 to establish alternative financing, the family said.

"The impact on our company has been crippling," they said, adding that they have been unable to trace roughly $2 million Alrub stole from the company. The Pittses said they suspect that Alrub has stashed the money someplace where it will not be found by creditors. In a separate case, Alrub has filed for Chapter 7 bankruptcy. The Pittses have also filed a lawsuit against Alrub in Baltimore County Civil Court to try to recover the money he took from them. That case has not been heard.

Alrub resigned from David Edward in early 2004 after the Pittses announced that they would conduct a "focused audit" to determine what was causing cash flow problems. In his vacant office, the family said Alrub left a note with the telephone number of his attorney -- an ominous sign.

According to prosecutors, Alrub managed to hide the fact that he was taking money from the company by falsely representing the true financial status of the business, including the balance of a line of credit with PNC. Not only did Alrub draw money from the account without the Pittses' permission, but he also extended the credit line from $1.5 million to $2 million by forging their signatures on bank documents.

Alrub also kept an M&T Bank account open after he had been instructed to close it. Instead, he continued to deposit David Edward funds into it so that he could withdraw the money, as he needed it, according to court documents. The former financial officer also diverted funds -- often by wire transfers -- from a Provident Bank account used to collect customer payments.

In addition to keeping $2.8 million for his personal use, Alrub funneled $1.2 million from David Edward accounts to his own businesses and $515,000 to people who worked for him, including a girlfriend who wanted to open a health spa and general store in Parkton, according to prosecutors.

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