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Crime Watch

UpFront
By JCK Staff
This story appears in the October 1996 issue of JCK magazine
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TWO PLEAD GUILTY, ONE CONVICTED IN FRAUD CASE

A U.S. District Court jury in Maryland has found Timothy C. Starinieri guilty of conspiracy and bank fraud in a case involving loose diamond inventories. Starinieri is the former chief financial officer at the now-defunct retailer Gouterman & Sheffey Inc. in McLean, Va. His accomplices in the scheme both pleaded guilty to related charges.

Starinieri, store President Steven M. Gouterman and New York City diamond supplier Jack Spitzer were accused of shifting diamonds between New York City and the company’s four retail stores in the Washington D.C.-area to inflate the value of the company’s inventory to serve as collateral for bank loans.

Earlier, Gouterman pleaded guilty to bank fraud and conspiracy charges; Spitzer pleaded guilty to a charge of aiding and abetting the commission of a bank fraud.

According to court documents, Starinieri and Gouterman arranged with Spitzer to supply loose diamonds to be included in bank-supervised inventory counts in 1990 and 1991. The diamonds were returned after the counts were completed.

In 1990, Gouterman & Sheffey obtained a $1.2 million line of credit and a year later unsuccessfully sought to increase the loan by $300,000. In 1991, the retailer declared bankruptcy. Its chief lender, Maryland National Bank, claimed losses of $1.5 million as a result.

Sentencing for all three is scheduled for October.

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