Chesla pleads guilty to laundering millions

A Ligonier Township man who owned a now-defunct armored car company pleaded guilty Tuesday to laundering $3.77 million from the business since the mid-1990s and evading taxes.

Barry J. Chesla, 44, of Route 271 north, pleaded guilty to single counts of money laundering and income tax evasion before U.S. District Court Judge Robert J. Cindrich in Pittsburgh.

Chesla could face a maximum sentence of 25 years in prison and $750,000 in fines when he is sentenced Dec. 7. However, as a first-time offender, Chesla will likely receive a sentence not exceeding eight years and one month under federal sentencing guidelines, according to federal authorities.

The three-year investigation into Chesla's former Executive Cash Services armored car business, and later Tri-State Armored Services Inc., is among the largest money-laundering cases ever handled in western Pennsylvania, according to Assistant U.S. Attorney Dennis P. Kissane.

The armored car company, which was based in Hammonton, N.J., and had an office in Ligonier, replenished cash at more than 3,000 automated teller machines along the East Coast. Tri-State closed March 1 and filed for bankruptcy the day before its chief executives in New Jersey were indicted there for money laundering.

Recent bankruptcy court documents filed in New Jersey estimated Tri-State's founders, including Chesla, plundered between $40 million and $50 million in cash from the company's customer banks. Chesla does not face criminal charges in New Jersey, but is named in bankruptcy court documents there as a principal in the theft scheme.

Kissane said the joint FBI and Internal Revenue Service probe into Chesla's activities locally was autonomous to the New Jersey probe.

'The same methods (for laundering money) were used here, the same primary sources to acquire the money were used ... banks and credit unions, but it appears (Chesla) acted independently,' Kissane said.

The heavyset, bearded Chesla spoke softly in court, replying 'Yes, sir,' when questioned by Cindrich about terms of his guilty plea. He was accompanied by his attorney, Edward Bilik of Greensburg.

Bilik told Cindrich that Chesla admitted bank thefts had occurred, but disagreed on the $3.77 million amount the U.S. Attorney's Office claims his client received.

The amount of Chesla's thefts appeared to stun even Cindrich, who questioned how the customer banks could lose so much money over such an extended period of time without noticing the thefts.

'Maybe we'll sort that out in the restitution hearings,' Cindrich said.

Under a plea agreement with the U.S. Attorney's Office, Chesla agreed to forfeit numerous properties he owns in Pennsylvania, Connecticut, Maryland and New Jersey, plus several luxury vehicles, including a 2000 Cadillac and 1998 Corvette, to make restitution to the banks.

Investigators estimated the value of the property they seized over the last 1 &*#189; years at between $4 million and $5 million.

'It's the largest forfeiture proceedings we've had here that I'm aware of,' said Assistant U.S. Attorney Mary McKeen Houghton, who also investigated the case and assisted Kissane yesterday.

Kissane told Cindrich that during the early 1990s, Chesla was employed in New Jersey as an automated teller machine installer and repairman for National Westminster Bank, which since has been purchased by Fleet Bank, earning a 'top annual salary' in the mid-$30,000 range.

Sometime in 1994, he met David McGrath of Hook Financial Co., an eastern Pennsylvania firm that supplied and repaired ATMs. Kissane said Chesla began accepting thousands of dollars in kickbacks from McGrath in return for selling McGrath used ATMs and parts.

McGrath put him on the Hook payroll as a ghost employee, Kissane said. McGrath has not been charged and was ready to testify against Chesla, Kissane told Cindrich.

Chesla subsequently became a principal in Executive Cash Services in New Jersey, which replenished automated teller machines with money along the East Coast. Kissane said Chesla moved back to his native Ligonier in mid-1996 and opened a branch there.

He began skimming cash from money wired to the armored car company by customer banks and diverted the money using 'an associate' from New Jersey, Janette Frattaroli-Reilly, according to Kissane. Kissane said on more than 200 occasions until December 1998, Chesla secretly funneled about $2.86 million into several accounts listed in Frattaroli-Reilly's name.

Sometimes the transfers were done by electronic exchanges and other times they were done in person.

'They would meet at various places along the Pennsylvania Turnpike where Chesla would give Frattaroli-Reilly cash. The amounts varied between $20,000 and $200,000 and would sometimes be placed in a paper bag ... wrapped in newspapers or even put in old suitcases,' Kissane said.

Frattaroli-Reilly would then place money in her accounts and make payments to Chesla via money order or cashier checks in amounts of less than $10,000, which do not require filing federal currency transfer reports. She would mail payments to Chesla's post office box in Ligonier or send it directly to pay Chesla's credit card bills, according to Kissane.

Kissane said Frattaroli-Reilly of Sicklerville, N.J., was paid a fee of 1 percent to 3 percent per transaction.

When Chesla returned to Ligonier, he began spending lavishly on gifts for friends and family and often paid cash for the items. He also used the money to buy real estate, including business enterprises and resort homes.

For example, in July the U.S. Attorney's Office filed documents to seize a 1999 BMW Chesla's brother, Gary, bought for his wife, Mary Alyce Frick, for $33,264. Federal officials allege Gary Chesla paid cash for the car in November 1998 using $250,000 his brother gave him, according to court documents.

Frattaroli-Reilly also pleaded guilty in connection with the money-laundering scheme but was expected to testify against Chesla, Kissane said. She is scheduled to be sentenced next month before Cindrich.

In explaining the tax evasion charge, Kissane told Cindrich that in 1998 Chesla reported on his federal income tax return total earnings of $36,478 when his taxable income that year was $952,978.

According to Tri-State's former chief executive, William Mottin, Chesla sold his interest in Executive Cash Services to Mottin and three others in 1998, and they changed the name to Tri-State Armored Car Services. However, Tri-State opened an office in Ligonier in a building owned by Chesla.

Mottin pleaded guilty Sept. 10 in U.S. District Court in Trenton, N.J., to laundering more than $1 million that belonged to Tri-State's clients. Mottin agreed to cooperate with investigators and will be sentenced Jan. 7.

Another Tri-State executive, Daniel Feuker, pleaded guilty March 12, admitting in court that company officials were taking money from customer accounts.

Kissane credited FBI agents Steven Francke and Patrick Howley and Internal Revenue Service crime investigator Thomas Fornataro with spearheading the investigation.