Federal prosecutors have revealed more about what they say was a “simple” scheme used by a Southwest Florida couple to steal nearly $5 million from Lee County taxpayers.
Robert and Kay Gow and another defendant are facing multiple counts of fraud and money laundering in a trial that begins next month. They are accused of taking economic development funds awarded to VR Laboratories to produce a vitamin health drink and create 208 jobs.
In a court filing this week, prosecutors said “the fraud itself was simple,” and involved hiring a friend to create a bottling line for the drink, then overcharging for the equipment bought from a legitimate supplier by claiming the mark-up was used to create special proprietary software to make putting liquid in a bottle more efficient.
Government lawyers say the software appears to have existed only in the mind of the son of co-defendant John G. Williams Jr.
Accusations concerning the past behavior of VR Labs principals Robert and Kay Gow were revealed in documents filed in their pending felony case in U.S. District Court in Fort Myers. (Photo: news-press.com)
They claim it “was either non-existent or created as a sham to disguise the fraud.”
Williams is alleged to have bought the bottling equipment at market price, sent inflated bills to VR Labs and kicked the excess back to the Gows. Prosecutors previously charged that the money went to fund what they termed a “lavish and wasteful” lifestyle.
In an interview with the FBI in November 2012, the prosecutors say Williams was questioned about “the software and its location,” and told them his son, John Mosley Williams, was developing the software.
The court document claims “Williams responded by pointing to his head and saying his son has it all in there.”
The questioning came “months after Williams sent his last invoice to the Gows for the software,” the government said, suggesting that VR Labs billed for software that never physically existed.
Prosecuting lawyers said the closest tangible representation of anything “remotely related to the software” was seen when John Moseley Williams asked a person not identified in the memorandum how software could improve bottling the VR Labs product.
The younger Williams showed that person “a one page picture of unassigned dials that represented what the software might ultimately look like in operation,” months after his father’s bottling company sent a final invoice to the Gows. At that point, the memo said, “it was clear to the witness that the process of creating the software was, at most, in its infancy.”
Assistant U.S. Attorneys Rachelle DesVaux Bedke and Michael Leeman filed the paperwork this week asking the court to overturn a magistrate judge’s refusal to allow federal prosecutors to obtain material related to Williams’ software that Lee County obtained in a suit seeking repayment of the grant.
Lee County, the Gows and Williams have been tangling in Lee Circuit Court over the software as part of the suit seeking to recover squandered funds. Federal prosecutors want software-related material provided to the county in that suit.
The outside lawyer hired by the county is willing to turn over the material he got from Williams, but must get out from under a Circuit Court order preventing the material from being used in the federal prosecution.
Magistrate Judge Carol Mirando rejected the prosecution’s first bid to get the information. DesVaux Bedke and Leeman want trial Judge John Steele to overturn Mirando’s order. A hearing on that bid is scheduled for later this month.
The filing reveals that in an interview with FBI agents as part of the investigation into the funds, Williams claimed his son would develop the software.
The company has not repaid the money and the county is attempting to trace information about where it went.
A Circuit Court hearing will be held this month on a county bid to force the Gows to answer questions. Lawyers for the county took a sworn deposition from Kay Gow, but she repeatedly invoked her Fifth Amendment right against self-incrimination.
More: Gows want VR Labs trial moved out of Fort Myers
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