Washington City man sentenced in federal court for taking $2.1 million in illegal kickbacks

Composite image with background photo of U.S. District Court in St. George, Utah, August 2019. Inset photo of Nan Ma, 37, booking photo taken in Washington County Sept. 3, 2020 | Booking photo courtesy of the Washington County Sheriff's Office, St. George News

ST. GEORGE — A Washington City man was sentenced to federal prison after he admitted during a federal court hearing on Tuesday that he stole millions of dollars in kickbacks from a local business.

2020 file photo of Nan Ma, 37, of Washington City, booking photo taken in Washington County, Utah, Sept. 3, 2020 | File photo courtesy of the Washington County Sheriff’s Office, St. George News

Nan Ma, 39, a Chinese citizen with legal permanent residency in the U.S., appeared in U.S. District Court in St. George on Tuesday for sentencing on one count of failure to file international monetary instrument transactions – a federal money laundering offense that is a felony.

U.S. District Judge Robert J. Shelby presided over the hearing and was the first to speak during the hearing, as he went over the special joint agreement signed by the parties that included a sentencing range. Shelby explained that in most cases, the plea agreements are honored since the parties are in a better position to determine the factors of the case, adding it appeared to be a balanced plea agreement with a broad sentencing range.

Even so, he made it clear he was not bound by any agreement in this case.

The judge sentenced the defendant to serve 33 months in federal prison, and once released, he will be placed on post-prison supervision for three years. He also ordered that Ma disclose his conviction to any future employers and prohibited Ma from opening any lines of credit or starting a new business once he is released and while on parole.

Shelby also ordered Ma to pay $3.4 million in restitution – $2.5 to SVT (the company from which Ma stole), and $777,000 to the IRS in back taxes for the money he took from the company and never reported as income. The judge also stipulated that SVT be paid first, and once that debt is satisfied, then the IRS would be paid.

The judge addressed Ma by saying that once the defendant serves out his sentence, then his debt to society is repaid, adding there is redemption in that. He also said that Ma would be teaching his children an important lesson by making things right.

The judge closed by saying that while there was nothing Ma could do to change what happened,  “you can find honor in what’s happening here.”

The defendant was ordered to surrender to the federal correctional facility as designated by the Bureau of Prisons by 10 a.m. on July 15.

Two Assistant U.S. Attorneys, Tyler Murray and Stephen Dent, represented the government during the hearing, while the defendant was represented by Mark R. Moffat, a defense attorney out of Salt Lake City.

Ma originally was indicted on three counts of wire fraud and six counts of money laundering for awarding nearly $12.4 million in contracts to Chinese companies. In exchange, the defendant received more than $1.2 million in kickbacks, all of which he concealed from his employer by lying, according to the indictment.

The defendant was hired in 2011 to serve as the vice president of SVT, a production and audio sourcing company in Hurricane that produces high-end home audio products and purchases most of its component parts from suppliers in China. Ma’s responsibilities included taking engineering drawings, ideas and designs to manufacturers in China to secure bids to manufacture component parts.

Ma was arrested on Sept. 3, 2020, at his home in Washington City and was released from custody three weeks later. He has remained on pretrial release.

On Nov. 21, 2021, the defendant signed a plea agreement that included a summarization of the crime to which Ma was pleading guilty.

In the document, the defendant admitted that in September 2019, he traveled to China and was paid nearly $48,000 in Chinese currency that he brought back into the United States without filling out a report, which is required for anyone bringing more than $10,000 in foreign currency into the United States.

While the information filed in federal court charged Ma with the money laundering offense, the amount actually taken from the company, which Ma admitted to in open court, was the $2.1 million, and he did so as an officer of the company. The company then would overpay for products after the defendant took all of the money that would come from rebates, repairs or downward pricing adjustments from the manufacturers – to the tune of more than $2.5 million.

5th Judicial District Courthouse, St. George, Utah, date unspecified | Photo by Andrew Pinckney, St. George News

One of the owners of SVT, Ronald G. Davies, was first to address the court by reading his victim impact statement on behalf of the company, saying they took Ma in as a member of their family and helped him to achieve “his American dream,” adding the defendant even lived with Davies family while he established himself.

To show his gratitude, Davies said, he stole from the company.

The defendant even offered to loan the business money when they were short, just so he could get his kickbacks sooner, he added.

The fraud not only hurt the company financially, it also damaged many relationships with its distributors. Davies also said the losses far exceed the $2.5 million, since the company must compensate for losses that took place over the course of years, and since then there have been “extraordinary inflation and ballooning costs” in today’s pricing market.

He also said the thought that an individual can come into the country and take more than their share by stealing is “egregious,” and Ma’s actions were shattering to their company – a small business – which is the backbone of the nation’s economy.

Davies closed by saying the defendant’s actions violated their trust and destroyed the bonds of friendship. He then asked the court to impose the maximum sentence.

Murray spoke on behalf of the government by saying the defendant’s crimes were “deliberate, repeated and calculated,” committed over several years, a few thousand dollars at a time, all the while undermining the profits the company should have earned. He added that the defendant started with SVT in2011, Ma was embraced by the company, as was his family.

In fact, the company paid $18,000 in legal fees to help secure Ma’s immigration status, and three years later, the company gave him a substantial raise so he could secure permanent residency status in the United States.

While Ma was presenting himself as a loyal employee and grateful recipient of his employer’s help, he was undermining the company by siphoning millions to himself that should have benefitted his employer – unbeknownst to them, Murray said.

Murray also said what is striking about this case was the massive personal betrayal that occurred between the owners and officers who opened their hearts and homes to the defendant as well.

Worse in many ways was the devastating personal betrayal against the business – one that had helped Ma become established in the United States and gave him a position of trust within the company. Murray described the fraud as a “crushing personal and financial blow” to SVT.

2019 file photo of interior of 5th District Court where both state and federal hearings are held, St. George, Utah, August 2019 | Photo by Cody Blowers, St. George News

He went on to say the people the defendant defrauded were the ones who had helped bring him and his wife to the United States, and had even helped Ma to buy a home.

“But that wasn’t enough – he wanted more,” Murray added.

Meanwhile, the company was left struggling and spent months trying to figure out why its profit margins were so much lower than expected, to the point that bills were being paid late. There were times when they were paid using borrowed funds or funds obtained from the sale of equity in the company.

The prosecutor said the sentence imposed should act as a deterrent for anyone who undermines the system by taking kickbacks, and then he asked that Ma be sentenced to 42 months in custody – the high end of the sentencing grid.

Moffitt also addressed the court by saying his client knew he wrongfully accepted the kickbacks and acknowledges he had a duty to provide an honest service to the company, adding Ma’s actions were a violation of trust.

He added that paying kickbacks is standard practice and part of the business culture in China, and if his client refused the money then it would be viewed as offensive – a point the judge took issue with by saying, “I’m going to part ways with you on this.” Shelby added that even if the practice is commonplace, Ma was not in a position to accept the money as an employee of the company.

Stock image | St. George News

Moffitt also mentioned that Ma was very good at negotiating better deals for the company and had a way with people that was a benefit to SVT. To that, the judge said Ma was well compensated for his efforts overseas but not for the side deals the defendant was making behind the owners’ backs.

Moffit also said his client had voluntarily agreed to pay the $2.5 million in restitution, a gesture he wanted to be considered by the court.

The judge responded by saying that part of any meaningful rehabilitation is paying restitution to restore the company to what it was prior to the offense taking place, and while that may not be possible, the judge said, the fact that Ma agreed to pay the money back was a factor that was not lost on the court.

“That is significant,” Shelby added.

The defense attorney also said his client forfeited all of his property and assets to make sure the company would be paid back, even at his and his family’s own peril. Soon after the arrest, his client’s wife filed for divorce, and the defendant is not able to see his children.

Moffitt asked the court to place his client on federal supervision in lieu of a prison sentence.

The defendant gave an emotional statement to the court, saying, “I am fully responsible for my actions,” adding that what he did was “totally wrong.”

He then bowed before Davies in silence for nearly a minute, and when he stood back up he said that Davies was part of Ma’s family, and yet he betrayed his trust, which was one of the biggest losses, the defendant said.

“I lost them,” he said, adding that what he did was wrong. “There are no other words for it.”

He also said he would help to sell any assets to repay the company and said he hoped the company would forgive him someday.

After a long pause, the judge commented before rendering his sentence by saying there are days when it is difficult to see anything good coming out of a hearing, and there are situations when no matter what, things will never go back to the way they were.

“It would be impossible to unwind all of this,” Shelby said.

Shelby said that Ma began stealing from the company incrementally, but even then he knew it was wrong, but he continued. Ma’s actions, the judge said, were calculated, repeated and deliberate – over a long period of time and were fueled by greed and status, the judge said.

“And it’s the community that bears the burden for these crimes.”

Shelby went on to say he could not remember a hearing where he witnessed such “genuine remorse or contrition” as what he had seen in this defendant, and while others that have gone before him were able to rationalize their crimes – “not so with Ma.”

This report is based on statements from court records, police or other responders and may not contain the full scope of findings. Persons arrested or charged are presumed innocent until found guilty in a court of law or as otherwise decided by a trier-of-fact.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2022, all rights reserved.

Free News Delivery by Email

Would you like to have the day's news stories delivered right to your inbox every evening? Enter your email below to start!