Over a period of 10 years, KBS Realty Advisors’ former chief auditor allegedly stole about $2.6 million from the company by creating and submitting fake invoices for work that was never performed, the U.S. Department of Justice announced Monday.
Varun Aggarwal, who worked for the Newport Beach-based real estate investment trust for 14 years, was arrested by FBI agents on Nov. 14 and faces charges of mail and wire fraud.
KBS has “proactively reimbursed the affected REITs for any amounts inappropriately charged to them, and for the costs the REITs incurred in the joint audit committees’ investigation,” KBS CEO Marc DeLuca said in a statement, adding the arrest was made as part of “multiple internal and external investigations.”
“We have taken this situation very seriously and given our full cooperation in these investigations,” DeLuca added.
Aggarwal most recently served as KBS’ head auditor, according to his LinkedIn profile, and resigned from the company in January after KBS began looking into some of his invoices, according to the criminal complaint filed with the U.S. District Court earlier this week.
He allegedly used his position “to embezzle his employer’s money,” the Justice Department said in a release.
KBS is a REIT that buys and operates office buildings. In Los Angeles, the company is trying to sell Union Bank Plaza to Waterbridge Capital, a firm run by embattled investor Joel Schreiber. In Northern California, the REIT owns The Almaden and Ten Almaden in San Jose, 201 Spear Street in San Francisco and The Towers Emeryville in Emeryville, according to its website.
From 2012 to this year, Aggarwal allegedly approved the hiring of six vendors — companies controlled by family and friends, according to the criminal complaint.
Aggarwal then allegedly used these vendors to submit “fraudulent” invoices to the company.
“Aggarwal had these companies bill KBS for consulting services that were not performed,” the criminal complaint said.
KBS then paid the fake invoices, after which the vendors would forward the payments to Aggarwal’s own bank accounts, the complaint said. The payments totaled more than $2.6 million.
According to the complaint, Aggarwal told a friend — who was interviewed by the U.S. government — that he had created fake invoices and had stolen $1 million from 2013 to 2015.
If convicted, Aggarwal could face up to 40 years in prison.