Park Ridge man admits to defrauding Toys R Us, another company out of millions

A Park Ridge man pleaded guilty Wednesday to defrauding Toys R Us and another company out of millions of dollars using shell companies and fake invoices, authorities announced.

Philip Charles de Gruchy, 64, and his wife, Barbara Brown, 66, were arrested in November 2014 by FBI agents after Wayne-based Toys R Us Inc., the company that employed Brown, alerted authorities that it had uncovered the fraud. Brown passed away in May 2017.

The two were accused of fraudulently obtaining payments from their employers by secretly controlling two sham Canadian companies that were hired to provide marketing consulting services.

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During the course of the scheme, the indictment stated the couple caused their employers “to pay more than $3 million in satisfaction of fraudulent invoices for work that was unnecessary, unauthorized, worthless, or never completed, while failing to disclose that they had a financial interest in these invoice payments.”

The consulting firms — CEM Direct Marketing Services and BI Insights — were little more than mailbox drops in Toronto, the indictment stated.

Over two years, the couple submitted 170 invoices to Toys R Us, billing $3.2 million for work supposedly performed by CEM, the indictment said.

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Brown, a former director at the toy retailer, approved or directed staff to approve all CEM invoices, and 68 checks sent to Toronto addresses were later deposited into a CEM account at a bank in Park Ridge that de Gruchy controlled, the indictment said.

De Gruchy used an unnamed co-conspirator to help conceal about $1.4 million in consulting fees paid by Toys R Us to CEM. Checks were funneled through several companies and then $1.32 million was “kicked back” to the couple, according to the indictment.

The couple used about $600,000 of the funds to remodel their four-bedroom home, $150,000 for mortgage payments and $300,000 for personal credit-card expenses, the indictment said.

De Gruchy also admitted that he filed false federal tax returns in 2009 and 2010 overstating expenses, acknowledging that he owes the IRS about $882,844.

Sentencing is scheduled for July 9.

Email: jongsma@northjersey.com