Frederick Business Owner Admits to Defrauding Charities

Stephen Lane Reid, Vice President of RMS Direct Inc., pleaded guilty to conspiracy to commit wire and mail fraud in a United States District Court on Tuesday. Reid also owned 35 percent of the bulk mailing company in Frederick which had more than 200 clients and revenues of more than $5 million per year. He was accused of cheating clients of his company out of more than $628,500 in this scheme that dates back to 2005.

Under his plea agreement, Reid and his company had contracts to prepare pamphlets and brochures that were sent out primarily for nonprofit corporations that relied on these mailings for their fundraising efforts. Beginning in 2005, Reid and another part-owner Chester Bigelow, sent clients falsified statements indicating that mailings were being sent out in a timely fashion. In order to alter the documents, RMS employees broke into a file cabinet with an unauthorized copy of a key used by the United States Postal Service acceptance clerk who worked at their facility. The employees used the clerk’s official stamp to falsify the fraudulent statements. The mail fraud scheme went further in 2009 when Reid and Bigelow began to pick mailings or parts of mailings that wouldn’t be mailed at all. Their clients continued to be charged for work that had not been performed.

Federal prosecutors say a total of at least 19 clients lost a total of $628,581. Among the victims were organizations such as: the National Wildlife Federation, the Special Olympics, and the Disabled American Veterans

Reid faces a maximum sentence of 20 years in a federal prison and a fine of up to $250,000. As part of the plea agreement, will also be required to forfeit $628,581. The sentencing hearing is scheduled for July 12^th.