Craig Jerabeck, former chief executive of multi-level marketing firm 5Linx, received a fourteen-month prison sentence this week for conspiracy to commit wire fraud and filing false tax returns. The Rochester, New York resident had pleaded guilty on May 1st to the federal charges.

The plea agreement, filed in U.S. District Court for the Western District of New York, detailed a scheme where Jerabeck and two co-conspirators diverted over $2.3 million from a vendor. Jerabeck admitted to working with Jason Guck and Jeb Tyler to pocket $2,310,510 from a Florida-based vendor. The trio funneled these payments through shell companies they secretly controlled.

These funds bypassed 5Linx's legitimate financial channels. Investors, the board of directors, and other stockholders in the company remained unaware of the illicit payments. 5Linx, a multi-level marketing company that offered telecom, energy, and wellness services, was owned by its investors from 2006 until January 2014. After that period, it became a creditor. The stockholder agreements specifically barred Jerabeck, Guck, and Tyler from receiving such payments directly. The money should have flowed into 5Linx itself.

Jerabeck also falsified his personal tax returns for the years 2011, 2012, 2013, and 2015. He failed to report income he received from 5Linx and claimed fraudulent deductions for commissions that were never actually paid out. This misreporting led to a loss of approximately $118,628 for the Internal Revenue Service.

As part of his plea deal, Jerabeck agreed to forfeit real estate located in Middlesex, New York. At his sentencing, the court mandated he pay $2,310,510 in restitution to the victims of the fraud. He must also pay $118,628 to the IRS for the unpaid taxes.

Jason Guck and Jeb Tyler, Jerabeck's co-conspirators, have also been convicted for their roles in the scheme. Their sentencing dates are scheduled for December 12th and December 19th, respectively.