Guilty: Couple scammed Best Buy out of $41.6M

In one of the biggest corporate fraud cases in Minnesota history, an Illinois couple was found guilty Thursday of defrauding best Buy out of $41.6 million and failing to pay taxes on their ill-gotten gains.

Russell and Abby Cole, who owned and operated a company that sold computer repair parts to best Buy, systematically overbilled the Richfield-based retail giant for four years through an online auction program. Their company, Chip Factory, worked closely with best Buy insider Robert Bossany to conceal the fraud, the jury found.

Bossany received weekly and biweekly checks from Chip Factory between may 2003 and August 2007 as well as a Harley Davidson motorcycle and Yamaha ATV. He pleaded guilty in 2009 of one count of mail fraud conspiracy and one count of money laundering.

Although both Coles were accused of sending Bossany checks and trying to cover up for it, only Russell Cole, 50, was found guilty of it.

Abby Cole, 53, started Chip Factory out of her home in 1988 when she was a single mother, and remained its CEO. she was portrayed as less involved in the day to day operations because she was busy raising the couple’s two young children.

But the jury believed that both Coles created “fluff sheets” and “padding” in a concerted effort to avoid paying taxes on the money they made overbilling best Buy, which was Chip Factory’s sole source of income.

The IRS estimated the Coles owed $3.3 million in federal income taxes from 2004 and 2007, including $1.8 million for parts Russell Cole sold on eBay.

The case was a victory for U.S. Attorney B. Todd Jones, who co-chairs a nationwide, interagency task force created last year by President Obama to investigate and prosecute financial crimes. Assistant U.S. Attorneys Nicole Engisch and William Otteson prosecuted the case.

Guilty: Couple scammed Best Buy out of $41.6M