CCR World Magazine

USA - A Mill Valley credit and bankruptcy consultant was arrested Tuesday on charges he stole nearly $2 million from an international corporation in Silicon Valley, authorities said.

Richard John Schwalbe, 57, was taken into custody at his Tamalpais Valley home on a warrant from the state Department of Justice. The warrant charges Schwalbe with felony embezzlement, theft and forgery, with additional allegations related to white-collar crime.

Schwalbe was being held without bail Tuesday at the Marin County Jail. He was expected to be transferred to Santa Clara County, where the criminal charges were filed.

Schwalbe's defense attorney, Douglas Horngrad, described the allegations as "hooey."

"Mr. Schwalbe denies the allegations, will do so in court, and will defend the case aggressively," Horngrad said.

Schwalbe, who describes himself in an online profile as "Trustee at the US Department of Justice," is a debt specialist who has recently been working as a court-appointed consultant in federal bankruptcy court.

The allegations stem from an earlier stint at Solectron Corp., a global electronics company in Milpitas that is now part of Singapore-based Flextronics. According to court documents, Solectron hired Schwalbe in 2003 to be global credit manager.

As such, Schwalbe was responsible for managing incoming debt payments and revenue from Telesensory Corp., a company in bankruptcy which Solectron had acquired for its intellectual property, assets and uncollected revenues. Schwalbe also managed the resale of Telesensory assets to another company, InSiPhil Pte Ltd. of Singapore.

Authorities allege that Schwalbe used his position to gain control of Telesensory's account at Silicon Valley Bank, arranged for incoming payments to be sent to an account he set up at a Wells Fargo in Mill Valley, and shorted Solectron money it should have been paid.

Schwalbe also filed a fictitious business name statement as "Telesensory Fund" with the county clerk's office, listed his home address for the entity, and linked the Wells Fargo account to the business, according to an affidavit by Special Agent Hal Berman of the California Department of Justice.

Flextronics bought Solectron in October 2007, and Schwalbe's employment ended in three months later. Yet he continued to represent himself as a Solectron manager in an effort to get payments sent to his Wells Fargo account, Berman said.

In 2008, questions began to be raised about "Telesensory Fund" and who authorized it to continue collecting outstanding payments for Solectron. Berman said he uncovered a trail of documents and e-mails and were apparently forged or doctored by Schwalbe.

In one instance, the signature of Schwalbe's former boss - the senior vice president/treasurer of Solectron - had the wrong middle initial and a misspelled first name.

After obtaining search warrants and combing through bank records, Berman concluded that Schwalbe continued to control Telesensory's account for six months after he left Solectron and "took approximately $1.8 million that should have gone to Solectron."

Berman said the stolen funds included five- or six-figure transfers from Solectron customers or affiliates in France, Germany and elsewhere.

Schwalbe's attorney said he thinks the allegations are "Flextronics' way of trying to gain advantage in potential civil litigation."

"My client's 57 years old, has no criminal record and had a sterling reputation in the investment community," Horngrad said.