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FORMER CONTROLLER OF CARPENTER & COMPANY PLEADS GUILTY TO FRAUD AND TAX CHARGES

Wednesday, July 14, 2010

BOSTON, Mass. - A Whitman man was convicted today in federal court of embezzling more than $450,000 from his employer and failing to report monies stolen and legitimate bonus payments on his federal tax returns.

United States Attorney Carmen M. Ortiz and Susan Dukes, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation, Boston Field Office, announced that MATTHEW J. ABUSHEERY, 37, pled guilty before U.S. District Judge Nathaniel M. Gorton to wire fraud and subscribing to false income tax returns.

At today’s plea hearing, the prosecutor told the Court that had the case proceeded to trial the government’s evidence would have proven that from October 2006 through September 2008, utilizing two separate schemes ABUSHEERY embezzled more than $450,000 from Carpenter and Company (“Carpenter”), a Cambridge-based real estate development and management company. At the time he stole the money, ABUSHEERY was Carpenter’s Controller and a member of the company’s management team. As Controller, ABUSHEERY was responsible for various accounting operations, to include payroll and the day-to-day management of the accounting department, including the accounts payable operation and overseeing Carpenter’s petty cash account.

ABUSHEERY embezzled the money from his employer using two schemes. First, in the payroll fraud scheme, ABUSHEERY fraudulently inflated his bi-weekly salary, causing himself to be paid an amount in excess of his authorized salary. At the relevant time, in the years 2006 through 2008, ABUSHEERY’s legitimate compensation from Carpenter, including his salary and annual bonus ranged between $160,000 and $230,000.

Carpenter used a private payroll processing service, Paychex, to handle its employees’ payroll. ABUSHEERY was one of only two people at Carpenter who had access to the Paychex payroll system. ABUSHEERY used his access to the Paychex payroll system to fraudulently inflate the amounts of money Paychex wire transfer by interstate wires to his personal bank account. Thus, by manipulating the Paychex payroll system, ABUSHEERY caused an additional $23,454 in 2006, $65, 231 in 2007 and $106,000 in 2008, to be deposited into his personal bank accounts.
In a second scheme, involving Carpenter’s petty cash account, ABUSHEERY routinely caused unauthorized checks to be written and negotiated for “petty cash” and then pocketed the cash for himself. Specifically, ABUSHEERY directed Carpenter’s accounts payable clerks to (1) prepare checks drawn on the company’s bank account for his signature; (2) cash the checks after he signed them, and (3) turn over the cash, generally in $100 bills, to him upon their return from the bank. ABUSHEERY then pocketed the money and used it for his own personal expenses. This procedure was followed for 68 ‘extra’ checks and thereby ABUSHEERY stole an additional $264,100 during the 2006 to 2008 time frame from Carpenter.

The prosecutor told the court that trial evidence would have shown that ABUSHEERY deposited over $80,000 in cash in his personal bank account and that these deposits generally consisted of $100 dollar bills – the same denomination obtained by the accounts payable clerks when they cashed Carpenter petty cash checks as directed by ABUSHEERY. Often theses deposits closely followed in time ABUSHEERY’s receipt of cash from petty cash checks.

As detailed by the government, ABUSHEERY abused his position of trust vis-a-vis his employer in executing both the payroll fraud and the petty cash fraud in that he had unique access to the Paychex payroll system and authority to approve the addition of petty cash checks to the weekly check run due to his position as Controller.

With regard to the subscribing to false income tax returns, for the calendar years 2006 and 2007, the prosecutor informed the court that evidence at trial would have proven that ABUSHEERY willfully made and subscribed U.S. individual tax returns, Forms 1040, which returns were false, as the defendant knew, in that they did not report the significant amounts of money stolen from Carpenter via the petty cash fraud and certain annual bonuses paid by Carpenter by wire transfer directly to ABUSHEERY’s personal bank account.

ABUSHEERY used the money that he stole from Carpenter to pay for a lifestyle that he could not otherwise afford on his substantial legitimate salary to include building an addition on his home, an extravagant personal resort in his backyard comprising a pool, pool house and putting green, as well as on lavish vacations.

Judge Gorton scheduled sentencing for October 19, 2010 at 3 pm. ABUSHEERY faces up to 20 years imprisonment, to be followed by 3 years of supervised release, and a $250,000 fine per count on the wire fraud charges and 3 years imprisonment, to be followed by 1 year of supervised release and a $250,000 fine per count on the subscribing to false income tax returns charges.

The case was investigated by the Internal Revenue Service. It is being prosecuted by Assistant U.S. Attorney Diane Freniere of Ortiz’s Public Corruption Unit.

 

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