Skip to main content
Business Observer Thursday, Feb. 28, 2019 6 months ago

Executives convicted in $5M economic development scam

Leaders of VR Labs convicted by federal jury on multiple counts of defrauding Lee County of $4.7 million in economic development grant funds.

FORT MYERS — A federal jury found three people connected with VR Laboratories guilty of defrauding Lee County of $4.7 million in economic development grant funds. 

In a decision announced Feb. 27, the jury found Kay F. Gow, 68, and Robert T. Gow, 77, both of Naples, and John G. Williams, 67, of Virginia Beach, Va., guilty of wire fraud and conspiracy to commit wire fraud. The Gows were also found guilty of conspiracy to commit money laundering and illegal monetary transactions, according to a statement from the U.S. Attorney's office. 

Each defendant faces a maximum of five years in federal prison for the conspiracy to commit wire fraud count and up to 20 years for each count of wire fraud, for which Kay and Robert Gow were found guilty of four counts and Williams two counts, the release adds. In addition, the Gows each face up to 10 years in federal prison for conspiracy to commit money laundering and for four counts of illegal monetary transactions. The defendants are also ordered to forfeit more than $5.1 million in proceeds traceable to the offenses. 

The Gows owned multiple entities, including HerbalScience Group and HerbalScience Singapore Pte. In 2010, authorities contended they formed VR Laboratories in order to apply for a $5 million grant from Lee County through the county’s Financial Incentives for Recruiting Strategic Targets program, which consisted of dedicated county taxpayer funds to encourage economic development projects.

But the Gows, officials alleged, made false and fraudulent representations about their financial success and that of HerbalScience and VR Labs, including that VR Labs was poised to become a leading global formulator and manufacturer of botanical pharmaceuticals. The company was then awarded grant funds to build a manufacturing facility firm officials claimed would bring hundreds of high-paying jobs and economic growth to Lee County, the release states. 

Williams registered a fictitious name, Williams Specialty Bottling Equipment, with the Florida Secretary of State, which the Gows represented would provide the bottling line for the manufacturing facility, according to officials. Williams, law enforcement officials say, then used false invoices for work and services allegedly performed on the bottling line to make demands for payments, then kicked back a substantial portion of the funds to VR Labs. The Gows then used the false invoices to justify requests to Lee County for payment of the grant money, transferring those funds to entities they owned and controlled, eventually to themselves, by disguising the transfers as licensing fees, salaries, expenses and other items, the release states. They also attempted to conceal the source of the kickbacks using fictitious entities and documents.

The Gows and Williams are scheduled to be sentenced May 20.

Related Stories