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A former Arrow Electronics executive accused of helping orchestrate a multimillion-dollar fraud scheme told a Colorado federal jury on Monday that he was merely a pawn manipulated by a deceitful CEO intent on salvaging a failing contract — not a criminal co-conspirator.

Michael Vergato, once a vice president at Arrow, is on trial for six counts of wire fraud and aiding and abetting. Prosecutors allege he and Mark Perlstein, the former CEO of database services company Datavail Corp., conspired to invoice Arrow for $1.9 million in fictitious services and pocketed the proceeds. Perlstein has since pleaded guilty and is now testifying against Vergato on behalf of the federal government.

Defense: “Perlstein Is a Professional Liar”

In opening arguments, Vergato’s attorney Morgan L. Steele of Taft Stettinius & Hollister LLP told jurors that Perlstein was a “master manipulator and professional liar” who used Vergato’s trust to advance his own goals, only to later shift blame onto him.

Steele said that Datavail was underperforming on a contract with Arrow, struggling to meet its obligations related to database performance tuning. In desperation to salvage the relationship with Arrow, Perlstein allegedly identified Vergato — a technically skilled and trusted insider — as someone who could help.

With his supervisor’s permission, Vergato began working as a consultant for Datavail. However, according to Steele, Vergato had no knowledge that Perlstein was secretly using his consulting company, Oracle Performance Tuning and Optimization LLC, to embezzle funds from Arrow. She claimed Perlstein was battling substance abuse and sex addiction, and when questions arose about Datavail’s payments to Vergato’s company, Perlstein pinned the scheme on Vergato.

“He quickly realized Mr. Vergato knew what he was doing and he was going to be able to help him with that strained relationship,” Steele told jurors. “None of it tracks back to Mr. Vergato. It all tracks back to the master manipulator, Mr. Perlstein.”

Prosecution: Scheme Fueled by Greed

In contrast, Assistant U.S. Attorney Nicole C. Cassidy told the jury that both men acted out of mutual self-interest, not innocence. According to Cassidy, Perlstein was under financial pressure and needed to maintain Arrow as a client, while Vergato was allegedly dissatisfied with his salary and saw an opportunity to earn extra money.

Cassidy said Vergato’s consulting firm billed Datavail for nearly 480 hours of non-existent work each month, ultimately funneling $800,000 to Vergato, which he allegedly used for personal expenses, investments, and even a new vehicle.

To obscure his involvement, Vergato allegedly used his stepdaughter’s name — who does not share his last name — on emails and contracts. Cassidy said the stepdaughter will testify that Vergato asked for her permission to use her name for a business venture without telling her about the nature of the operation.

“This was a calculated scheme,” Cassidy told the jury. “Perlstein needed Arrow, and Vergato wanted more money.”

Unraveling the Scheme

The alleged fraud lasted for several years, from 2014 to 2020, before it started to unravel. Prosecutors claim Perlstein and Vergato became increasingly careless in their attempts to conceal the scheme. When Perlstein was placed on leave in 2020 for misusing a corporate credit card, questions from Datavail employees triggered an internal investigation.

That probe eventually led to criminal charges filed in June 2023, with prosecutors asserting that Vergato formed his company for the sole purpose of laundering fraudulent payments tied to the Datavail-Arrow contract.

The indictment also accuses Perlstein’s brother-in-law of operating a separate company that billed Vergato’s entity for sham services, then routed part of those payments back to Perlstein.

Trial Underway

The seven-day trial will feature key testimony from Mark Perlstein, who will testify under a plea agreement. The government intends to show a paper trail, emails, financial records, and statements from multiple witnesses — including Vergato’s teenage stepdaughter.

The U.S. government is represented by Acting U.S. Attorney J. Bishop Grewell, along with Bradley W. Giles and Nicole C. Cassidy of the U.S. Attorney’s Office for the District of Colorado.

Vergato is represented by Morgan L. Steele and Richard Bednarski of Taft Stettinius & Hollister LLP.

Case Information

Case Title: United States v. Michael Vergato
Jurisdiction: U.S. District Court for the District of Colorado
Filed: June 2023
Trial Start Date: May 2025
Charges: Six counts of wire fraud and aiding and abetting