GREENEVILLE -- A 34-year-old Piney Flats man has been sentenced to 14 months in federal prison for using more than $200,000 in counterfeit postage with his online vinyl decal business.
Jason Matthew Smalling appeared in U.S. District Court in Greeneville Monday morning and received the 14 month prison sentence. Judge Ronnie Greer also ordered Smalling to pay a $5,000 fine, serve three years of supervised release following the prison term and pay $330,000 in restitution to the U.S. Postal Service.
Smalling pleaded guilty in October 2013 to an information charging him with mail fraud in connection to a scheme where he create counterfeit postage mailing labels with his home-based, online business Value Decals.
Smalling faced a maximum of 20 years in prison and a $250,000 fine. Smalling attorney had argued for 24 months of probation.
According to court records, Smalling first thought of the idea of selling vinyl decals over the Internet as a project for a class he was taking at Northeast State Community College. After graduating Magna Cum Laude, Smalling went on to attend King College and eventually graduated with a B.S. in Information Technology while maintaining a 4.0 grade point average.
A sentencing memorandum states Smalling took the initial development of the infrastructure of his class project and used it to eventually create the company, Value Decals.
Prosecutors say Smalling created and sold vinyl decals, some being generic images with others being the logos of professional sports teams, including those of Major League Baseball, the National Football League, the National Basketball Association and the National Hockey League.
However, the logos of the professional sports teams were unlicensed reproductions.
From August 2011 until June 2013, Smalling created fake team logos and counterfeit postage on a computer, received orders through his business' website and shipped them Priority Mail through the U.S. Postal Service, court records state.
Smalling used computer software to reproduce information-based indicia from postage obtained through Stamps.com, manipulating the address information, but using the same bar-coded information from the original postage.
In other words, Smalling mailed hundreds of packages without paying for the postage.
In a sentencing memorandum, Smalling attorney -- David Robbins of Elizabethton - argues that due to the volume of orders received, the process became overly burdensome for Smalling to print each shipping label individually. Therefore, Smalling used a program to print labels en masse.
While the labels bore the same bar-code information, all of the addresses were different.
Robbins wrote that while initially, this was something Smalling overlooked, at some point he did realize it was happening and failed to correct the problem.
According to the plea agreement, on May 15, Smalling sent 312 Priority Mail packages with fake postage from the Bluff City post office.
Smalling and prosecutors agree the scheme defrauded the U.S. Postal Service of at least $200,000 but not more than $400,000. Federal agents seized more than $26,250 from three of Smalling's Sun Trust bank accounts and $600 in cash on the day of his arrest.