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Feds Charge Bergen Drug Company Owner With Embezzling $3.9M

John Klein
John Klein Photo Credit: http://johnkleinnj.com/

Federal agents arrested the former chief executive officer and owner of a Bergen County pharmaceutical firm on Monday and charged him with embezzling millions of dollars from the company, authorities confirmed.

John Klein, 75, transferred $3.9 million into an account that he tapped, in part, to pay credit cards charges for him and his wife, as well as for his kid's tuition, Acting U.S. Attorney Rachael A. Honig said.

Formerly of Alpine and currently living in Palisades Park, Klein has been sued in federal court by several people with whom he either worked or collected investment money from at Cambridge Therapeutic Technologies in Teaneck, records show.

They've said he "looted and pilfered" the company to fund a "lavish" and "luxurious" lifestyle that included a summer rental on Long Island's East End, season tickets to Chicago Bears games.

One said he used investor money to pay taxes on what was then his "palatial" $20 million estate in Alpine.

Plaintiffs said Klein also withdraw cash in amounts of just under $10,000 -- the federal reporting requirement -- and "made improper and unexplained payments in excess of $1.1 million to his brother, friends and other associates who have no connection" to the business.

The federal complaint says Klein hired a CFO who "created a profit and loss statement showing the pharmaceutical company’s sales and corresponding receivables.

"According to that individual, Klein provided information that included an account receivable of approximately $3.9 million from a customer that had not been collected," the complaint on file in U.D. District Court in Newark says.

"In December 2016 and January 2017, the pharmaceutical company, with Klein’s knowledge and approval, put a reserve against the uncollected receivable in the financial statements," it says.

Federal investigators found that Klein "controlled and used a pre-existing pharmaceutical company bank account" and that "a review of that account revealed that the approximately $3.9 million was transferred into the bank account in May 2016.

"In a June 2016 email, Klein acknowledged that the invoices related to the approximately $3.9 million had been paid in full," the complaint says.

"A review of the company bank account also showed that following the wire transfers of approximately $3.9 million, Klein made numerous personal expenditures out of the account, including credit card payments for his himself and his wife, payment of property taxes, and tuition payments for his child’s private school," it adds.

Klein, who was in federal custody, was scheduled to appear via videoconference Monday with a U.S. District Court judge in Newark who'll determine whether he should be released or detained, Honig said.

Honig credited special agents of the FBI and IRS – Criminal Investigation with the investigation leading to Monday's arrest.

Handling the case for the government are Assistant U.S. Attorneys Anthony Torntore and Andrew Kogan of her Cybercrime Unit in Newark.

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