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Former QVC Director Accused Of Running Million-Dollar Fraud Scheme With PR Agency, Production Company

PHILADELPHIA, Pa. (CBS) -- A former QVC marketing director is accused of manufacturing a million-dollar fraud scheme with a public relations agency and a production company.

James Falkowski, 42, of Buffalo, New York, has been charged with 11 counts of wire and mail fraud, and one count of conspiracy, Acting United States Attorney Louis Lappen said in a statement.

The indictment claims Falkowski allegedly used kickback arrangements to fraudulently obtain from QVC over $1,000,000 worth of money, goods and services, without the network's knowledge.

According to the U.S. Attorney's Office, Falkowski had QVC hire The Steinberg Group, a Los Angeles-based public relations, to serve as the network's outside public relations agency.

Falkowski allegedly used the agency to launder hundreds of thousands of dollars of his personal expenses by causing the group to reimburse him directly for his personal expenses.

However, as the U.S. Attorney's Office says, after paying Falkowski, The Steinberg Group obtained reimbursement from the network by issuing alleged fraudulent invoices to QVC that were written in Falkowski's direction or he wrote himself.

Falkowski allegedly caused the group to reimburse him for expenses that he also submitted directly to QVC for reimbursement, which caused QVC to unknowingly repay him multiple times for the same expenses.

Falkowski is also accused of using a second QVC vendor, SPEC Entertainment, to fraudulently alter invoices that the New York City production company submitted to the network to hide the true costs of his expenses.

The Steinberg Group's president and general counsel were allegedly instructed by Falkowski on how to become a QVC vendor representative and earn royalties from the network. The U.S. Attorney's Office says since Falkowski secretly assisted the agency in negotiating against QVC, they secretly cut him into the deal, agreeing to pay him a 50 percent on all royalty payments received from QVC, as well as for funds received from a separate deal related to product sold by a QVC competitor.

The U.S. Attorney's Office added a similar kickback deal was negotiated between SPEC Entertainment and Falkowski, where he received a 33 percent kickback.

The indictment claims Falkowski spent hundreds of thousands of dollars on trips, chauffeur rides, pre-paid American Express cards, and even Botox.

QVC says in a statement that they have been cooperating with authorities.

"At QVC, we take allegations of unethical or unlawful business conduct on the part of our employees and our business partners very seriously. In addition to conducting a thorough investigation into this matter, we have been cooperating fully with authorities," the company said.

He faces up to 11 years in prison.

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