WOODLAND HILLS : Pair Plead Guilty in Toy Company Fraud

A Woodland Hills man and his former colleague have pleaded guilty to tax evasion and securities fraud in connection to siphoning more than $1 million from a Chatsworth toy company.

Barry Benjamin, 57, of Woodland Hills and Steven Zuloff, 50, of Bel Air entered the pleas in federal court to two counts of tax evasion and one count of securities fraud, said Assistant U.S. Atty. Peter G. Spivack, who prosecuted the case.

Zuloff is the former president of With Design In Mind Inc. of Chatsworth, and Benjamin is the former secretary and treasurer of the company, which is publicly traded.

According to Spivack, the defendants diverted funds from With Design in Mind and used them to pay personal expenses.

This income was not listed on their tax returns, Spivack said, leading to a charge that Zuloff evaded approximately $69,938 in taxes and Benjamin evaded about $37,336.

Benjamin and Zuloff also admitted they diverted commission payment for sales of the company’s products to their own bank accounts through a variety of means.

Spivack said the defendants agreed to make a combined restitution of $1,168,310, which is the amount they diverted from the company between 1988 and 1991, Spivack said. So far, the defendants have repaid the company $250,000 and turned over 701,000 shares of stock that they own.

In addition, both men face up to 20 years imprisonment and a $1.5-million fine for tax evasion and securities fraud. Sentencing will be Dec. 5.

The case is a result of a joint investigation by the FBI and Internal Revenue Service.