CLEVELAND, Ohio (WOIO) - Discovery Tours Inc. Vice President Joseph Cipolletti faces an 18-count indictment charging him with bank fraud, money laundering, wire fraud, and making a false statement after embezzling thousands of dollars from Northeast Ohio families, according to the Department of Justice.
“This defendant is accused of embezzling thousands of dollars from hardworking Northeast Ohio families, intended to provide their children and students with meaningful educational experiences, for his own personal use – such as buying vehicles and backyard renovations,” said U.S. Attorney for the Northern District of Ohio Justin Herdman. “As a result of the defendant’s alleged actions, his place of business was forced into bankruptcy, and our community’s schoolchildren were deprived of invaluable experiences and memories.”
According to the indictment, the 45-year-old Hudson man was Vice President of the company that provides educational trips to grade school and high school students.
Discovery Tours, Inc. took students to destinations like Chicago, Columbus, Gettysburg, and New York City on a coach bus .
Aside from transportation, the cost of the tours included hotel accommodations, meals, security, and sightseeing.
Joseph Cipolletti’s duties as Vice President included managing the business’ bank accounts and finances, accounts payable, accounts receivable, cash withdrawals, general ledger entries, payroll, and taxes, according to the indictment.
Court documents ranging from June 2014 to May 2018 show Cipolleti allegedly devised a scheme to divert payments from these educational tours to his personal use.
“The defendant defrauded parents, other student trip purchasers, and embezzled funds meant for school trips on items such as home renovations and personal vehicles. Overall, the defendant is alleged to have embezzled approximately $609,942 from his place of business,” according to Herdman.
Herdman continued to say, “the defendant allegedly took many actions to further his scheme, including making multiple false entries in the Discovery Tours general ledger claiming embezzled funds were trip-related expenses, forging an email to a hotel vendor claiming that the business suffered a loss of $236,022.27 due to a hacked account, paying vendors for previous student trips with deposits from future trips, and obtaining high-out interest loans to conceal his actions. The high interest on these loans ultimately led to Discovery Tours eventual bankruptcy filing. "
"The fraud perpetrated by Mr. Cippoletti stole money from hardworking families and school districts. The scheme deprived students of annual trips that have become a tradition and provide a lifetime of memories," said Special Agent in Charge Eric B. Smith. "Great work by partner agencies including the Summit County Prosecutor's Office, the Geauga County Prosecutor's Office, and Ohio BCI, laid the initial groundwork for the FBI and the USAO to obtain this federal indictment. We will continue to work with partners throughout Northeast Ohio to seek justice for the communities we serve."
"When these families paid for a trip, fraud wasn't on the itinerary," said Ohio Attorney General Dave Yost. "This business owner didn't keep his word, so now his next destination will be the courthouse."
“This individual is a typical con man,” said Cuyahoga County Prosecutor Michael O’Malley called the former Vice President “a typical conman” who “took money from parents and never intended on fulfilling his obligations.”
Summit County Prosecutor Sherri Bevan Walsh said her office opened an investigation into these allegations over two years ago.
“My hope is those responsible for taking money from local families and depriving students of a once-in-a-lifetime trip will be held accountable,” Walsh said.
The Department of Justice described the following allegations he is facing::
“In one instance, according to the indictment, on or about May 19, 2016, a hotel vendor sent the defendant an email stating that payment for a previous school trip had not been made and was overdue. The hotel vendor informed the defendant that because of this delay in payment, the business would be required to prepay for future events. The hotel vendor advised the defendant that payment in full for the hotel accommodations was not received by a specific time and date, then the next student group would not be permitted to check-in.
On or about May 21, 2016, knowing that his organization's business account did not have sufficient funds, the defendant issued five checks totaling $72,540, payable to the hotel, and had an employee travel in interstate commerce from Ohio to Virginia to hand deliver the checks to the hotel. All the checks were returned for insufficient funds.
That indictment states that as a result of the defendant's actions, on May 7, 2018, Discovery Tours abruptly ended operations and filed for bankruptcy in United States Bankruptcy Court for the Northern District of Ohio. Student trips to Washington, D.C. were canceled for dozens of schools across Ohio and more than 5,000 families lost the money they had previously paid for trip fees.
Furthermore, on December 10, 2018, in the United States Bankruptcy Court for the Northern District of Ohio, the defendant is alleged to have knowingly made statements under oath in and in relation to his organization’s bankruptcy status. The defendant claimed that he did not owe his business any money, when in fact, and as he then knew, the defendant embezzled $609,942 from his place of business and made false entries in the general ledger.”
The Cleveland Division of the FBI and Akron Resident Agency conducted the investigation.
Assistant U.S. Attorney Brian McDonough is prosecuting this case.