North Carolina Man Pleads Guilty To Embezzling $11 Million In Payroll Tax Fraud Scheme - Lived Lavishly

From WSOCTV on 3/5/2015:

An Iron Station man pleaded guilty in federal court Thursday on charges he bilked $11 million from clients and used it to fund a lavish lifestyle, including strip club visits and three-tiered pools.

James Staz, 44, pleaded guilty to wire fraud, money laundering and tax evasion as part of a plea agreement. A superseding indictment filed in court charged him with 16 counts.

James Staz and his father, William Staz, operated payroll company Employee-Services.net and provided several duties for clients, including collecting and paying employment taxes, investigators said.

Court documents allege the company collected $11 million to be used for federal and state employment taxes, but in reality it went toward James Staz and Williams Staz's lifestyles.

The executive director of one of the victim companies, The Chapel Hill Training-Outreach Project, said the first realized something was wrong in early 2014.

"We received a phone call from an IRS agent asking us where our most recent tax withholdings check was," said Mike Mathers, executive director for the company. The nonprofit helps children with disabilities.

"Employee Services took care of (our tax withholdings) and apparently that was the beginning of (Employee Services) not taking care of it," Mathers said.

James Staz on a single day "spent a total of $38,880 at strip clubs and night clubs," the indictment indicated.

Investigators want the pair to pay for their alleged financial crimes.

The father and son's company once had around "500 client companies located in North Carolina" and other states, according to the indictment.

James Staz could face up to 20 years in prison.

Tennessee Woman Sentenced For Embezzling $350K From Knoxville Business

From the Knoxville News Sentinel on 3/5/2015:

Embezzler ordered jailed for failing to report purloined cash to IRS

A federal judge on Tuesday ordered a woman who stole more than $350,000 from a family-owned Knoxville firm to spend six months behind bars and another six months on house arrest.

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Read the whole story here (requires subscription).

Athletic Club Owners In Washington State Accused Of Embezzling More Than $500K From Workers

From the Washington State Attorney General's Office on 2/6/2015:

Washington State Attorney General Bob Ferguson has filed criminal charges in King County Superior Court against the owners and operators of West Seattle Athletic Club for stealing wages and evading taxes. In only the second wage theft criminal prosecution brought by the state, the Attorney General’s Office seeks justice for harmed workers and Washington taxpayers.

Defendants Sam Adams and Dana Sargent are alleged to have engaged in theft and fraud totaling over $500,000. The defendants allegedly failed to pay state taxes, withheld wages from workers, failed to pay workers’ insurance premiums, and failed to pay unemployment insurance.
The charging documents can be found here and here.

“Wage theft is a crime, and its victims are often among our most vulnerable residents. I won’t stand for violators who cheat working families out of their hard-earned wages,” said Attorney General Bob Ferguson. “My office will prosecute unscrupulous businesses that steal money out of the pockets of wage earners and taxpayers.”

Owned Two Athletic Clubs in Washington

According to the charging documents, the defendants owned and operated six athletic clubs, four in Oregon and two in Washington, between 2012 and 2014.

One Washington location, Lincoln Plaza Athletic Club LLC in Tacoma, closed in 2013 due to unpaid retail sales tax.

The other Washington location, West Seattle Athletic Club LLC, closed in 2013, after which West Seattle Club LLC opened at the same location. This operation closed in October 2014 after the landlord evicted the defendants for unpaid rent.

Allegations of Theft and Fraud

The AGO alleges the defendants:

• Failed to pay the state approximately $446,000 in retail sales taxes that they collected for their Washington athletic clubs.
• Failed to pay 11 employees wages they rightfully earned totaling $7,166.
• Deducted insurance premium payments from employee paychecks, but failed to pay the insurance company, Aetna Healthcare. Aetna lost approximately $41,640 in unpaid medical and dental premiums, and workers were exposed to the risk of unpaid medical bills.
• Failed to pay over $35,000 into state unemployment insurance.

Criminal Charges Filed, Restitution Sought

The AGO has charged Adams and Sargent with:

• Five counts of Theft in the First Degree (Class B felony, 10-year maximum sentence);
• Three counts of Theft in the Second Degree (Class C felony, 5-year maximum sentence);
• Four counts of Filing a False or Fraudulent Tax Return (Class C felony, 5-year maximum sentence); and
• Nine counts of Theft in the Third Degree (gross misdemeanor, 364-day maximum sentence).

Sentencing guidelines indicate a potential sentencing range for the charges of 43 to 57 months. The AGO has alleged that aggravating circumstances are present in this case, which could lead to an upward departure from that range.

The AGO is also seeking full restitution for all of the victims involved including the State of Washington, the individual employees, and Aetna Healthcare.

Arraignment is scheduled for Feb. 18, 2015 in King County Superior Court.

The charges contained in the charging documents are allegations only. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

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Read the whole press release here.

Connecticut Man Pleads Guilty To Charges He Embezzled $150K From Connecticut Canine Search and Rescue Organization

From WTNH News8 on 2/4/2015:

A United States Attorney for the District of Connecticut, announced that Thomas Recck, of New Britain, waived his right to indictment and pled guilty today before U.S. District Judge Jeffrey Alker Meyer in Bridgeport to fraud and tax charges stemming from an embezzlement scheme.

According to court documents and statements made in court, Recck was the Treasurer for Connecticut Canine Search and Rescue, Inc. (“CCSAR”) in Kensington, a volunteer-based nonprofit organization dedicated to the search and rescue of missing and lost persons in the United States by using trained search and rescue dogs. In his capacity as the treasurer, Recck had access to the bank accounts of CCSAR. From approximately Jan. 2008 to Aug. 2012, RECCK transferred $150,329.57 from CCCSR accounts into a separate account that he controlled and used the funds to gamble and other personal expenses.

Recck also failed to report the stolen funds on his federal tax returns.

Recck pled guilty to one count of wire fraud, which carries a maximum term of imprisonment of 20 years, and one count of filing a false tax return, which carries a maximum term of imprisonment of three years. Judge Meyer scheduled sentencing for April 29, 2015. Recck also has agreed to full restitution, as well as back taxes, penalties and interest for the 2008 through 2012 tax years.

Following his guilty plea, Recck was released on bond.

Pennsylvania Woman Sentenced For Embezzling $419K; Had Prior History Of Embezzlement

From The Morning Call on 1/30/2015:

Calling her a "predator," U.S. District Judge Edward G. Smith on Friday sentenced an Easton woman to six years in federal prison for embezzling more than $400,000 from a Whitehall Township repo agency where she worked.

Felicia Straub, 42, misused her company credit card, using company accounts to pay her personal bills, including Victoria's Secret and Coach purchases, after gaining the trust of the late owner of the family business, Michael Yaroma.

 

"There is a fundamental flaw in your character," Smith told Straub during the 4 1/2-hour sentencing in federal court in Easton. "To betray someone on a scale of this nature is truly disturbing."

Straub was ordered to pay restitution in the amount of $419,331 to Joanne Yaroma, the owner's 74-year-old widow, $39,959 to PNC Bank and $136,364 to the Internal Revenue Service.

In September, Straub pleaded guilty to three counts of wire fraud, one count of aggravated identity theft and one count of tax evasion.

At the sentencing, family members said Joanne Yaroma had come to every court hearing because she wanted the court to know that Straub's crimes weren't against some faceless corporation but a family business.

The son of a coal miner and waitress from Shenandoah, Michael Yaroma raised a family of five in Whitehall and, as he began putting them through college, launched the repo agency, Financial Adjusters Inc. He eventually paid himself a salary, which averaged $12 an hour, in hopes that the business would one day be his retirement, family members testified.

He did not use computers — not even for email — and gave Straub, who was hired in 2003, sole access to accounting software for the business. The company recovers cars and other merchandise from people who stop making loan payments.

 

It wasn't until late 2010 that Yaroma began to suspect that someone was stealing from the company.
In November 2010, Yaroma discovered that the IRS had placed a lien on the company's funds because it had fallen behind on its Social Security and Medicare contributions and its own federal income tax.

Straub initially admitted stealing from the company after its offices on MacArthur Road burned in a December 2010 fire that investigators flagged as suspicious.

Yaroma's daughter, a certified public accountant who works for the FBI, helped her father untangle the extent of the crime.

In her tearful testimony before the judge, Straub read an email she had sent Yaroma, which was printed out for him to read. She said there were no words to describe her regret. She said there was something wrong with her, and it felt like "something living in my brain." She said she loved him and is ashamed.

"I feel like a monster," she said, reading from the email in court.
Yaroma died in December 2011.

Family members say Yaroma was deeply hurt by Straub's betrayal and felt stupid for not uncovering the deception earlier.

A month before her husband died, Joanne Yaroma said, he told her he didn't want revenge, only justice.

"As I write this," Joanne Yaroma said, reading from a statement, "I wish I could be so kind … I don't think Felicia is sorry for anything she did. I just think she is sorry she got caught."

Assistant U.S. Attorney Kishan Nair said Straub's acknowledgment of responsibility is "marginal acceptance."

He said she has since "shockingly worked her way into a position of trust" with a "competitor" of Yaroma's business — whose owners testified Friday on Straub's behalf — and noted that she had stolen money from the business she worked for before Yaroma.

In 1999, Straub, then known as Felicia Anne Frey, was placed under house arrest after pleading guilty in Lehigh County for stealing $46,000 from a Papa John's Pizza franchise in South Whitehall Township where she worked as a bookkeeper.

In federal court, Straub had 13 people testify in her defense. The mother of three, they described her as a loving parent whose absence would upend the family. They praised her for her work as a team parent to her daughter's tournament volleyball team and for helping friends who were going through recovery.

Her primary care physicians said she has anxiety and depression and had childhood issues, including living in foster homes and homelessness.

The Yaroma family has since sold the repo business.

Pennsylvania Woman Sentenced To 2 Years For Embezzling $300K From Law Firm

From the Pittsburgh Post-Gazette on 12/6/2014:

Debra Feather worked 41 years for the McDonald Snyder & Lightcap law firm in Latrobe, where she handled the books with the complete trust of the partners.

But for 12 of those years she was abusing that trust, systematically stealing $300,000 from the firm and using it for personal expenses, including credit card bills and Pirates tickets.

Friday a judge sent her to prison for two years for evading income taxes on $150,000 of what she pilfered.

U.S. District Judge Arthur J. Schwab imposed that term despite her lawyer’s plea for probation based on the fact that she’s 63, has health problems, lost her job at the firm and suffered “embarrassment and humiliation” from her crime.

Assistant U.S. attorney Leo Dillon argued for prison, saying probation is not appropriate in federal tax cases because it undermines the effectiveness of the IRS.

“The only way to deter criminal tax violations is via sentences of imprisonment,” he told the judge in a pre-sentence filing.

Feather pleaded guilty in August to tax counts pertaining to failure to pay taxes on the $150,000 she stole from 2007 to 2010, although the U.S. attorney’s office said the total loss was $300,000 dating to 1998. The tax loss to the government was about $84,000 for those 12 years.

Feather handled payroll at the firm for years without suspicion until she broke her leg in 2010. Laid up at home in traction, she couldn't make it to work to write payroll checks. So one of the partners, Donald Snyder, and an accountant took over.

In going through the books, Mr. Snyder discovered an IRS deficiency notice indicating a penalty had been imposed for failure to deposit payroll taxes for the first quarter of 2010.

He looked closer and found checks that were written to people who had no business with the law firm. Feather, it turned out, had been looting the firm for years by writing checks to herself, forging endorsements on other checks and falsifying records.

Mr. Snyder fired her and called local police. The case was eventually turned over to the criminal investigation division of the IRS to pursue tax charges rather than theft offenses, which would be a state crime.

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Read the whole story here.

North Carolina Woman Sentenced To 2 Years For Embezzling Nearly $840K From Bookkeeping Clients

From the News Herald on 10/30/2014:

STATESVILLE, N.C. – A Lenoir woman was sentenced to 24 months in federal prison Monday, according to a release from the office of U.S. Attorney Anne M. Tompkins.

Denise Swanson was convicted of tax evasion, the release said. She will serve three years under court supervision following her release from prison. She was ordered to pay $839,830 in restitution to client victims and $249,912 to the IRS, according to the release.
 Swanson was the owner and operator of Bottom-line Accounting, a tax preparation and bookkeeping business, court records show. She performed tax preparation services for clients, which included making related tax payments on their behalf, the records show.

Swanson received funds from clients intended to go toward tax obligations to the IRS and other state agencies, the release said. Instead of making payments, she embezzled the money and used it to pay for her daughter’s college tuition, renovations to her house, gambling, and to cover personal expenses, the release said.
 

Court records show she failed to report the embezzled income on her individual tax returns for tax years 2006 through 2011. Swanson pleaded guilty to tax evasion for 2010 in August 2013, the release said.
 

Swanson was allowed to remain free following the sentencing hearing. She will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility, according to the release.

Minnesota Man Involved In Incredible $6.3 Million Embezzlment Saga

From the Pioneer Press on 2/18/14:

The saga has betrayal, blackmail and even a longtime mistress. And then there's the millions of dollars allegedly embezzled from one of St. Paul's best-known businessmen.  In a court document filed Friday, federal prosecutors laid out the case they plan to present to a jury next week when John Joseph Waters Jr. goes on trial, accused of stealing from his longtime boss and friend, the late Gerard Leon Cafesjian, the retired West Publishing executive whose name is on St. Paul's famous carousel.  Assistant U.S. Attorney William Otteson wrote in a pretrial brief that Waters engineered a scheme to embezzle millions from Cafesjian and that the scam lasted for years. "Waters used the stolen money to satisfy the expensive personal spending habits of himself, his family, and a mistress whom he was secretly supporting for years," Otteson wrote.  The alleged embezzlement totaled $4 million, the government claims, and he gave more than $700,000 of it "to his mistress, Cheri Kuhn (now Cheri Waters), whom he met at the Deja Vu nightclub in the late 1990s and with whom he was having a long-term affair," Otteson wrote.  Waters, 57, of Eden Prairie has pleaded not guilty to the charges. In August, he was named in a 26-count federal indictment accusing him of mail and wire fraud, income tax evasion and filing a false income tax return.  His trial is scheduled to begin Feb. 24 in U.S. District Court in Minneapolis.

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Read the whole story here.

Former Maine Bank Loan Officer Pleads Guilty To Fraud Charges In $14 Million Embezzlement Case

From the Associated Press on 2/4/14:

A former Maine bank loan officer has pleaded guilty to federal fraud and tax evasion charges, using his position to authorize over $14 million in fraudulent loans and lines of credit for 16 years.

Court documents say 56-year-old Walter Scott Fox, formerly of Cumberland, authorized the loans at Casco Northern Bank and its successor, KeyBank using people's identities without their knowledge or consent.

 

Prosecutors say Fox used over $5.8 million of the proceeds to keep the loans current and prevent the detection of his scheme. He used almost $8.2 million for personal expenses. The income wasn't reported to the Internal Revenue Service.

 

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Read the story here.

Tennessee Man Sentenced For Embezzling $216K From Local Housing Authority

David Royce Ford, 35, of Ripley, Tennessee, has been sentenced to 2 years in prison for embezzling some $216,000 from the Ripley Housing Authority where he had previously served as executive director.  According to authorities, over at least a one year period, beginning in January 2009 and continuing until 2010, Ford made numerous unauthorized purchases and withdrawals from the agency's checking account for his own benefit that included payments to buy a motorcycle and a Ford F150 pickup truck.  He is also accused of failing to report about $50,000 in additional income for tax purposes.  Ford pleaded guilty to tax evasion and money laundering in January 2012.

Read the story here and here.

Read the DOJ announcement of his guilty plea here.

Hat tip: FraudTalk reader Joe.

South Carolina Woman To Plead Guilty To Embezzling Nearly $500K From Hospital Association

Rachel Duncan, 41, of Columbia, South Carolina, has a plea agreement to plead guilty to felony counts of wire fraud and tax evasion in connection with her alleged embezzlement of nearly $500,000 from the South Carolina Hospitality Association where she had been employed as accounting director.  According to authorities, over a period of nearly six years, from 2006 through early 2012, Duncan siphoned $481,000 from the non-profit association by writing checks to herself.  Tom Sponseller, the group's longtime director, committed suicide this past February leaving a note that suggested he was despondent over Duncan's misdeeds on his watch.  Duncan reportedly stole the money to support her online gambling habit.  The plea agreement includes full restitution.

Read the story here, here and here.

Update (4/26/12): Duncan has formally pleaded guilty and appologized for her actions which she blamed on a gambling addiction.  Read an update to the story here and here.

Update (8/14/12): Duncan has been sentenced to 30 months in prison and ordered to pay $367,000 in restitution. 

Nevada Man Sentenced For Embezzling $2.5 Million From Electronic Lock Company

Juan Ramon Cabezas, 56, of Reno, Nevada, has been sentenced to 87 months in prison for embezzling some $2.5 million from Securitron Magnalock Corp. for whom he had been employed as chief financial officer.  According to prosecutors, over a period of nearly 7 years, from May 2003 to early 2010, Cabezas diverted company funds into his own personal retirement account as well as forged checks for his own benefit.  He pleaded guilty last October to charges of mail and bank fraud, tax evasion, identity theft and money laundering.  Cabezas, who was also ordered to pay a $50,000 fine, has reportedly already made restitution to the company in the amount of $3.5 million.

Read the story here and here.

Read the DOJ announcement of his indictment here.

New Jersey Man Pleads Guilty To Embezzling $10.4 Million From Investment Firm

David Newmark, 39, of Towaco, New Jersey, pleaded guilty to embezzling more than $10.4 million from Columbus Hill Capital Management LP, where he had been employed as chief financial officer.  According to prosecutors, over a period of over 3 years, from February 2008 to March 2011, Newmark siphoned funds from the firm by depositing monies to a phony account he created for his own benefit.  Newmark pleaded guilty to wire fraud and tax evasion charges and is due to be sentenced on April 24, 2011.  Prosecutors said Newmark had a serious gambling problem.

Read the story here and here.

This one is a good candidate for the top 10 of the year...

Update (6/7/12): Newmark has been sentenced to 54 months in prison. 

DC Council Member Charged With Embezzling $350K

Harry Thomas Jr., 51, of Washington, DC, has been charged by federal authorities with embezzling more than $350,000 in government funds from the District of Columbia where he had been serving as a Council Member.  Federal authorities allege that Thomas funnelled government funds, intended for youth sports programs, through intermediaries to pay for personal expenses that included an Audi sport-utility vehicle and golf trips. Thomas, who has been charged with theft of federal funds and tax evasion, resigned his position after the allegations were made public.  The misappropriation allegedly occurred over a nearly 2 year period, from April 2007 to February 2009 and totalled $353,500. 

Read the story here and here.

Read the charging document here.

Update (5/2/12): Thomas has been sentenced to 38 months in prison.  He had plead guilty to theft and tax evasion charges in January 2012.

Maryland Man Setenced For Embezzling $850K From DC Church

Jason Todd Reynolds, 40,  of Bowie, Maryland, has been sentenced to more than eight years in prison  for embezzling more than $850,000 from National City Christian Church of Washington, DC, where he had served as chief financial officer.  According to authorities, wrote checks to himself and abused church credit card and other accounts for his own benefit, including paying for "extravagant vacations, VIP tickets to NBA games, and fancy cars."  He was also accused of fraudulently taking out a $450,000 line of credit in the church's name for his own benefit as well.  Reynolds' various schemes spanned a period of five years, from 2003 to 2008.  He has been convicted on 12 felony counts including wire fraud, bank fraud, falsifying a loan application, aggravated identity theft and tax evasion.   Reynolds was ordered to pay $851,298 in restitution, plus $185,435 in back taxes on the ill-gotten gains.



Read the story here  and here.

Hat tip: FraudTalk reader Joe.

Maryland Woman Pleads Guilty To Tax Evasion Following $382K Embezzlement

Collette Snyder, 42, of Timonium, MD, pleaded guilty last week to filing a false tax return for the years 2007 and 2008.  The charges stem from her alleged embezzlement of some $382,000 from Maple Leaf Title where she had been employed as a clerk responsible for recording real estate transaction documents.  According to media reports, Snyder had signature authority over a number of the company's accounts.  Starting in 2007, Snyder reportedly began endorsing company checks to her husband and depositing into his account, without his knowledge, forging his signature.  She also began writing checks to directly to herself and depositing them for her own benefit.

Read the story here.

Update (4/5/12): Snyder has been sentenced to 1 year and a day in federal prison.  She was also ordered to pay $115,529 in restitution to the IRS for taxes owed on the ill-gotten gains.

Missouri Woman Pleads Guilty To Embezzling $718K From Nursing School

Amy Elaine Phillips, 39, of Republic, Missouri, has pleaded guilty to charges she embezzled $718,000 from the St. John’s Mercy Health Care Systems and the College of  Nursing where she had been employed as an administrative assistant with bookkeeping responsibilities.  According to authorities, over a three year period, from 2004 through 2007, Phillips intercepted checks payable to the college and deposited them into her own accounts.  After this scheme was halted by her bank, which objected to depositing checks that did not list her as the payee, Phillips began withdrawing funds from the Student Nurses Association bank account on days when she made student deposits.  This latter scheme lasted another two years, from 2007 through 2009, whereby she stole more than $657,000.  Phillips has also plead guilty to tax evasion for income not reported between 2004 and 2008.  In the plea agreement, Phillips has agreed to pay restitution in the amount of $717,999, in addition to back taxes of $115,117 plus interest, to the IRS.  She faces up to 15 years in prison.

Read the story here and here.

Hat tip: FraudTalk reader Joe.

Update (2/17/12): Phillips has been sentenced to 30 months in prison and ordered to pay $718,000 in restitution, plus $115,000 in back taxes and interest to the IRS. 

Former CFO Of Restaurant Chain In California Arrested For Embezzling More Than $1.1 Million

James Cram, 54, of Rancho Palos Verdes, California, has been arrested on charges he embezzled some $1,146,000 from Hennessey's, Inc., a chain of restaurants for which he had been employed as chief financial officer.  Specifically, Cram has been arrested on 19 felony counts including grand theft, money laundering and tax evasion police said.  The thefts may have spanned as long as 5 years, from 2006 until 2010.  Police investigators indicated that Cram was "basically writing checks to himself or his own creditors..." and forging the owner's name on checks.  Cram is being held on $500,000 bond. 

Read the story here and here.

Read the police press release here.

Update (11/23/11): Cram pleaded guilty to one count of grand theft embezzlement and one count of filing a false tax return admitting he embezzled more than $1.146 million.  Thus far he has repaid $610,000 in restitution, according to reports.

Update: Indiana Woman Pleads Not Guilty To $364K Church Embezzlement Charges

Beth Ann Boger, 44, of Garrett, Indiana, has pleaded not guilty to charges she embezzled more than $364,000 from the St. Joseph Catholic Church where she had served as bookkeeper.  According to authorities, over a nearly five year period, from  June 2004 to April 2009, Boger wrote checks from church coffers out to a business she owned called Accents By Beth and used the money for her own benefit.  Boger was indicted last month on six counts of felony wire fraud and four counts of felony tax evasion.

Read the story here.

See FraudTalk's earlier post on this story here.

New Jersey Man Sentenced For Role In $784K Postal Service Union Embezzlement Scheme

John McGovern, 55, currently of Hawthorne, New Jersey and formerly of Ridgewood, New Jersey, has been sentenced to 20 months in prison for embezzling $783,931 from the North Jersey Area Local 190 of the American Postal Workers International Union where he had served as secretary-treasurer. According to authorities, McGovern conspired with the union's former president, Gary G. Weightman, 58, of Keansburg, New Jersey, to siphon payroll funds by issuing additional additional pay to themselves as well as reimbursing themselves for non-existent or personal expenses. The scheme spanned a two and a half year period, from April 2000 to October 2002. McGovern pleaded guilty last November to one count of conspiracy to embezzle from a union. He is reported to have spent much of the ill-gotten gains at casinos in Atlantic City. Weightman has pleaded guilty to tax evasion and is due to be sentenced for his part on June 10, 2011. The two were originally arrested in February 2006.

Read the story here, here and here.