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Barbara Brown, 64, was an administrator with Toys R Us in Wayne when the government says she she steered a contract to CEM Direct Marketing — a fictitious company created by her and her husband, Philip Charles DeGrunchy.
From November 2007 through early March 2010, CEM submitted more than 60 invoices for purported consulting work that the then-married couple “either copied from other vendors’ work, was related to other businesses or did not correspond to items on CEM’s invoices,” according to an FBI complaint on file in U.S. District Court in Newark.
CEM had TRU mail checks to various Canadian addresses before they were ultimately deposited at bank branches in White Plains, N.Y.
Checks were then written out of the CEM account payable directly to either de Gruchy or Brown or to Silk Farm and Ontario LLC, companies affiliated with de Gruchy, the federal complaint says.
Brown left the TRU with a severance following a series of poor performance reviews, court records show.
For 16 months, beginning in July 2010, deGruchy worked for Tumi Luggage in South Plainfield as director of global relations management.
While there, he hired Brown for a project without disclosing their relationship, federal authorities said.
From Nov. 4, 2010, through Sept. 22, 2011, the company mailed $216,835 in checks to a Canadian address purporting to belong to Brown or BI Insights, an alleged Canadian company engaged in marketing consulting services and controlled by Brown, the FBI complaint says.
De Gruchy approved all of the invoices, even though “no meaningful work product was furnished,” it says.
“Additional invoices submitted by Brown to [Tumi] totaling $124,150, were not paid after the scheme to defraud was uncovered,” the complaint says.
Brown and deGruchy used the money for themselves, including home renovations, mortgage payments and credit card bills, it says.
After discovering that CEM’s website was registered to Brown’s home address, Toys R Us filed suit in Superior Court in Hackensack — and the government investigated.
Besides CEM, Brown and deGruchy, TRU sued a designated contact person that it said may not even exist.
“CEM was a fraudulent enterprise without any legitimate business purpose or dealings that served merely to advance the objectives of the fraudulent scheme as an instrument of deception and a receptacle to which Brown and DeGruchy could divert stolen or misappropriated monies from TRU and possibly other victims,” the complaint filed in Superior Court in Bergen County said.
Brown personally approved payment of CEM’s invoices, it says.
The company accused CEM of invoicing TRU for a “segmentation analysis” conducted by a different vendor for Brown, for more than $920,000 worth of other reports that it didn’t actually prepare and for nearly $1.8 million that “does not correspond to any actual, ostensible, or noted work product.”
Brown also had more than $369,000 in CEM invoices sitting in her TRU email account that were never submitted, the company added.
Both Brown and deGruchy were released on $250,000 unsecured bonds following a federal court appearance this afternoon in Newark.
U.S. Attorney Paul Fishman praised special agents of the FBI for their work on the investigation. Prosecuting for the government is Assistant U.S. Attorney Leslie Faye Schwartz of Fishman’s Economic Crimes Unit in Newark.
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