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Forged Check Leads to Felony Arrest

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web Richard Klein

By Claire Walla

Last Sunday, January 16 Sag Harbor Village Police arrested Richard Klein, 67, of East Hampton on five felony counts — including two counts of grand larceny in the third degree — and one misdemeanor charge related to a Scheme to Defraud his then employer, the Sag Harbor Express.

Klein was arraigned in Sag Harbor that night and taken to Suffolk County Correctional Facility in Riverhead, where he is currently being held without bail. During their investigation, police discovered Klein has had two prior felony convictions in the state of New York for which he previously served jail time.

His case is due back at the Sag Harbor Justice Court on Friday, January 21.

The fraud was discovered last Thursday, January 13 when the Sag Harbor Express‘ bookkeeper noticed a discrepancy on the company’s December bank statement. An unauthorized check for over $9,000 had been issued to a local business, one that was currently advertising with the paper.

That day, the bookkeeper and the paper’s publisher, Bryan Boyhan, went to Suffolk County National Bank to get a copy of the erroneous check.

“The signature on it was not my handwriting,” Boyhan explained. “I immediately went to the police with it.”

The subsequent investigation revealed a long line of fraudulent financial transactions stretching back to the spring of 2010, which were initiated by Klein, who worked as a sales representative at the Express.

“Trying to figure all this out was like trying to untangle a piece of spaghetti and make it straight,” said Sag Harbor Police Sergeant Paul Fabiano.

Over the weekend, he and Detective Jeff Proctor sat with financial records of Klein’s transactions since his initial hire in the fall of 2009. They were able to determine that Klein allegedly used credit card information from three local businesses to pay for several other businesses’ ads.

One of these three credit cards belonged to the business to whom the fraudulent check was issued. Last fall, personnel at that company began to notice credit card charges totaling roughly $9,000 over what the company had actually purchased in advertising. According to police, this is where the forged check comes into play.

Sgt. Fabiano went to the business on Friday to speak with the company’s bookkeeper. She reportedly told police she received a check from Klein last month for just over $9,000 as payment for charges Klein allegedly described as “unintentional.”

“He was falsely representing the position of The Express,” Fabiano noted.

What’s more, police also discovered Klein had bartered with local businesses, trading ad space for food and other services. Boyhan notes that Klein did not have the authority to negotiate deals that were not outlined on the company’s rate card. By making a trade deal with an advertiser then recording the transaction as a regular sale, Klein was able to collect commission, in addition to whatever other benefits or services he negotiated with the business.

The Express loses in three ways,” Fabiano continued.  “It loses commission, the commission bonus, if [Klein] qualified for it, and the ad fee.”

“I would say he was struggling to meet his goals,” Boyhan said. “Much of the advertising he was paying for [with stolen credit cards] had never been approved in the first place. It appears he was doing this so he could collect his commission.”

All fraudulent transactions at this point total around $17,000, and involve about 20 local businesses. Boyhan suspects many of these businesses might not be aware that they had been getting what is essentially free advertising.

It’s not yet clear how the situation will be remedied at this point — Klein isn’t expected to be indicted until Friday, January 21. But Boyhan said he’s anxious to make things right for the businesses affected by this situation.

The Express has had a great relationship with the businesses in this community and that’s very important to me and everyone else at The Express,” he said.

Boyhan, who has been at the Sag Harbor Express for 22 years, said this is the first time an employee has breached trust to this extent.

“In personal relationships and in business relationships you have faith that the person you’re doing business with is honorable,” he said. “We at The Express are shocked that someone we were doing business with turned out to be untrustworthy.”