Warrant Details: Lyddy Conspired With Contractor, Freelancer To Divert Funds
UPDATE (Tuesday, September 18, 2018): This story has been updated to reflect a change of arraignment date.
UPDATE (Monday, September 17, 2018): This story has been updated to reflect the updated location of the September 19 arraignment.
* * * * *
The arrest warrant application for Kyle Lyddy, the past chairman of the Sandy Hook Permanent Memorial Commission accused of misappropriating approximately a half-million dollars from a former employer, indicates he did not perpetrate the alleged larceny on his own.
The warrant details that Lyddy apparently left a blazing trail of evidence for authorities to follow leading up to his arrest on a first degree larceny charge September 10, including at least one e-mail message instructing an accomplice on how to create fraudulent invoices used as part of a multi-year scheme.
A 14-page warrant obtained by The Newtown Bee meticulously details, incident by incident, the collection of evidence Lyddy’s former employer, Match Marketing Service, and eventually Norwalk Police investigators, used to build their case.
Norwalk Detective Daniel Sevario states in the warrant that he was contacted and met with Match’s Manager Director Elizabeth Seltzer on August 3. Ms Seltzer was formerly employed along with Lyddy at a marketing firm called Amplitude, which the warrant states was acquired by Match in early 2016.
When Ms Seltzer transitioned to Match, she was permitted to pick a team to work with her, and she chose Lyddy, who she identified in the warrant as “a good worker.”
According to the warrant, in November 2017, evidence used to build the case against Lyddy first presented itself as “significant cost overruns” in one of the company’s accounts. Upon deeper review, a Match staffer and a hired consultant developed “control issues and instances of fraud,” involving Lyddy, as well as a Match independent contractor and a freelancer who the warrant states previously worked with Lyddy at Amplitude.
That freelancer, an Atlanta, Ga., resident, worked on two key Match programs in 2016 and 2017, the warrant states, while the contractor, a Match field manager, also owns a freight company that assists in transportation tied to various Match promotions as well as providing and training representation on site for various Match client programs.
The warrant states that in his capacity with Match, Lyddy served as a project manager, where he was responsible for budget development and reconciliation. He was also charged with approving expenses submitted by field managers and vendors. Police say that any invoice submitted for payment required a purchase order and management approval, and in his position, Lyddy was able to both generate and approve purchase orders for payment distribution.
Much of the paper trail investigators were able to use in building their case came from receipts and charges Lyddy and the alleged accomplices made on Match company American Express (AMX) cards, which, according to the warrant, had no spending limitations.
The warrant states that the contractor both made fraudulent charges on his Match-issued AMX card and received payments through his company via Lyddy’s company-issued AMX card. In addition, fraudulent payments were reportedly made to the contractor directly by check from Match and through a Venmo/PayPal account that was not authorized by Match.
The warrant states that Lyddy was responsible for securing the AMX cards for the alleged accomplices and was solely responsible for approving expenses charged to those cards. It appears that virtually all the fraudulent charges were billed to Match client jobs but had no validity for the projects billed.
Building The Case
Once Match discovered the possible thread of fraud, the company put together a team to rebuild the project data involving every “tour” Lyddy had supervised throughout his period of employment, the warrant states. Once those tours were rebuilt, Match personnel were able to cross reference every location, stop, route, date, and “reality of expenses” tied to purchases and charges Lyddy and the alleged accomplices made in 2016, 2017, and 2018.
Match then provided that highly detailed litany of allegedly fraudulent activity to Norwalk police — 18 exhibits with corresponding dollar losses for each, along with highly detailed supporting facts, documents, tracking, transaction, and charge data.
According to the warrant, those exhibits included:
*$9,637.50 on the company AMX card for 124 consecutive days stay at the Danbury Holiday Inn between September 4, 2016, and January 6, 2017. He reportedly billed and approved the charges as “out of pocket expenses” for in- and out-of-state field reps.
*6,463.75 between Lyddy’s and the contractor’s AMX cards for website redesign for Lyddy’s personal outside nonprofit organization, the National Association of Collegiate Basketball Managers (NACMB). Those charges were reportedly billed to Match clients, and the warrant states that Lyddy admitted to those charges and partially reimbursed Match $4,040 toward the outstanding amount. Approximately $2,800 more for an Adobe Creative Cloud subscription, a web hosting service, a DropBox account, and a web-based member communication software service were also reportedly billed to the Match AMX account.
*$1,863 in Omni Hotel gift cards charged through the contractor’s AMX card for Lyddy’s personal use.
Multiple Travel Charges
The warrant also details a number of non-business-related trips and travel-related expenses Lyddy allegedly paid for with the Match AMX card. Investigators said that while Lyddy filed numerous charges against Match client accounts, at the same time, he was posting images and references to the personal trips he was on to his social media pages.
At least one of those trips was related to the NACMB nonprofit — a trip to a National Association of Collegiate basketball Managers conference in Phoenix, Ariz., during which he racked up $2,658.54 in fraudulent charges, the warrant states.
In addition, Lyddy charged $1,796.10 for a Norwegian Cruise Line trip in June 2016; $1,599.36 for a personal trip to Gilbert, Ariz., in June 2017; $1,711.70 for a trip to Nashville, Tenn., in August 2017; $2,686.40 for a trip to Dallas, Texas, in November 2017; and $222.07 for a trip to Wallingford in July 2017.
The warrant also details $312.54 spent for a trip to a wedding in Long Beach, N.Y., in October 2017; $959.86 for a wedding trip to Middletown in September 2017; and $$4,050.25 for a wedding trip to Naples, Fla., in February 2017. He also reportedly spent $535.50 during a trip to a “Disarm Hate Rally” in Washington, DC in August 2016.
Investigators said in the warrant that a significant chunk ($280,839.79) of the approximately $500,000 allegedly misappropriated was approved by Lyddy after they were funneled through the contractor’s freight company by inflating and fabricating invoices.
The warrant states that Lyddy also used his Match AMX card to purchase a $955 iPad Pro, which he promised to return to Match, but he reportedly never did up to the filing of the warrant, and for multiple fuel purchases for his own and other vehicles, most from stations near his home in Connecticut and the Match offices in Norwalk.
The warrant states that Lyddy applied these charges to various jobs across the country, despite the detailed billing information indicating he made those purchases locally. Additionally, a number of out of state fuel purchases did not match locations where Lyddy was traveling for business purposes.
The arrest warrant states that Lyddy and the two alleged accomplices utilized a non-Match-approved digital wallet app called Venmo, through which the trio made purchases billing $96,272.04 in charges back to the corporate AMX accounts. All related charges were approved by Lyddy.
One of those charges was believed to be a single dinner bill at Trumbull’s Prime One Eleven, the warrant states, and totaled $1,493.50. Lyddy additionally used the AMX account directly for restaurant, fast food, and liquor charges tied to business in the Newtown and Danbury areas and around his family’s beach house in Fairfield totaling $4,107.99
In another instance, Match was able to isolate an e-mail in which Lyddy reportedly instructed the freelancer on how to create fraudulent invoices, which were generated for a company called “Reddy Ice.” However, the three invoices the freelancer allegedly fabricated were easy to spot because they contained either out of sequence dates and numbering or used the same invoice number for two separate charges.
The warrant states that Lyddy also charged $2,709.71 to the Match AMX card for his personal Verizon wireless account and tied those expenses to various Match projects where he knew funds were available. The three accused also racked up personal shopping expenses on those Match credit cards at stores including CVS, Walmart, Walgreens, Staples, and Target.
Lyddy reportedly charged $8,208.40; the contractor reportedly charged $2,369.40; and the freelancer reportedly charged $532.19.
Lyddy used the corporate AMX card for $518.34 in personal, non-business-related Uber rides and billed the card $376 for forever US Postal stamps and $637 for overnight shipments tied to his chairman position with the Sandy Hook Permanent Memorial Commission, the warrant states. The AMX card was also used by Lyddy and the contractor for various other shipping charges, in all totaling $4,107.02.
The warrant states that Lyddy additionally used the AMX to charge $7,093.72 for an airbnb stay in October 2017, which he reportedly admitted using for his fiancée and himself. He also used his own and another Match field manager’s AMX for various expenses tied to the Lyddy family’s annual Light Up The Point fundraisers to benefit Swim Across the Sound, the warrant states, totaling $7,481.10.
The warrant goes on to detail how Lyddy became familiar with vulnerabilities in a Match expense reimbursement system called Concur. Lyddy reportedly crafted receipts for any expense he wanted and received payments totaling $16,429.37 of the eventual $53,653.13 fraudulently charged through Concur, the warrant states.
The contractor reportedly also used the Concur system to “double dip,” by paying for things including a personal trip to San Francisco ($2,071.56), and then billing the Concur system for the same expenses. In all, the warrant states that Match attributed $16,501.87 in fraudulent Concur expenses to the contractor.
At the same time, the warrant states that the freelancer generated $20,721.89 in fraudulent Concur expenses, in part by expensing per diem reimbursements he had concurrently charged to the Match AMX card.
First confronted with questions about the alleged fraud, Lyddy resigned from Match in January 2018, the warrant states. In April 2018, the company had already identified between $250,000 and $300,000 tied to the alleged fraudulent practices and asked Lyddy to meet with company officials.
The warrant states that on April 19, 2018, Lyddy and his attorney, Willie Dow, met with company officials, including Ms Seltzer and a Match attorney identified as Laura Salvatori. During that meeting, Lyddy reportedly admitted to colluding with the contractor and freelancer to “steal money.” Lyddy also reportedly stated that Match was “lacking in monthly financial oversight” and asked if Match would release him in exchange for his assistance in helping the company pursue charges against the contractor and freelancer, but Match officials refused.
Lyddy also offered to pay back the Venmo charges, and the Match officials refused.
Less than a month later, on May 13, Lyddy reportedly e-mailed Ms Seltzer and other Match principles, cc-ing his attorney. In that e-mail, Lyddy uses phrases like “I take responsibility for that,” wanting to have a “conversation to resolve this matter,” and saying, “I fully grasp the severity of this,” but never directly admitting to doing anything wrong specifically. He acknowledges that, “This has put me in a position with many close friends and family that will alter the rest of my life both morally and financially,” the warrant states.
The warrant states that in that e-mail, Lyddy says he attempted to contact the alleged accomplices, “to ensure they are aware of the severity” of the accusations, and to be sure they are “held accountable for their end of the majority of this restitution.”
He goes on to offer a structured schedule of repayments to Match that would total $190,000. After getting no response from Match officials, three days later, he sent a follow-up e-mail, stating in part, “I’m truly, truly hopeful [about resolving matters] through negotiation without further conflict.”
Armed with the evidence provided, Detective Sevario applied for an arrest warrant on September 5, and Lyddy’s arrest was made on September 10. Lyddy made the $100,000 bail and an appearance was set in Norwalk Superior Court to respond to the single larceny charge on October 1. The Norwalk Police public information officer did not return multiple messages left by The Newtown Bee requesting comment on the case.
Change Text Size: