ozark business owner sentenced for $6.7 million bank fraud
SPRINGFIELD, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that an Ozark, Mo., business owner was sentenced in federal court today for a $6.7 million bank fraud scheme, money laundering and failure to pay taxes.
James E. Ledbetter, 67, of Ozark, was sentenced by U.S. District Judge Brian C. Wimes to five years and three months in federal prison without parole. The court also ordered Ledbetter to pay $4,666,888 in restitution to Bancorp South and $1,567,447 in restitution to the IRS.
Ledbetter was the president and executive officer of Ledbetter, Toth & Associates, Inc., as well as Ledbetter, Corner & Associates, Inc., and Ledbetter & Associates, Inc., which were engineering firms based in Springfield that provided engineering and architectural services to municipalities, electrical cooperatives and other entities.
On March 8, 2012, Ledbetter pleaded guilty to bank fraud, money laundering and failure to pay taxes.
Ledbetter entered into a factoring agreement with The Bank on October 11, 2001. (The Bank merged with Signature Bank on or about July 30, 2004, and became known as The Signature Bank. The Signature Bank was purchased by Bancorp South on or about July 1, 2007, and became part of Bancorp South.) This agreement allowed Ledbetter to sell account receivables from his engineering firm to The Bank for operating cash. In essence, Ledbetter sold The Bank the right to collect on the contracts he entered into with various municipalities, electrical cooperatives, and other customers, for a percentage of the total invoice amount (usually 80 percent). This gave Ledbetter immediate operating cash. The Bank then collected payment from Ledbetter’s customers for the full invoice amount.
Ledbetter admitted that, from 2003 to 2007, he falsely inflated the amount due on dozens of receivables that he sold to The Bank. Ledbetter also sold receivables to The Bank prior to performing the services reflected in the invoices, and when no services were in fact due to be performed. Sometimes Ledbetter fabricated the entire invoice to make it appear as though it was a legitimate receivable. Ledbetter sold The Bank approximately $6,770,781 worth of falsely-inflated, fraudulent accounts receivable.
Ledbetter transferred a total of $75,000 from this Ledbetter & Associates account at The Bank to another bank account, knowing that the funds were the illegal proceeds of the bank fraud scheme. By conducting the transaction, Ledbetter intended to conceal and disguise the source, ownership, and control of the proceeds of the unlawful activity.
Ledbetter also admitted that he collected payroll taxes from his employees but failed to pay those taxes over to the IRS. Ledbetter deducted and collected from the total taxable wages of his employees federal income taxes and Federal Insurance Contributions Act taxes in the amount of $65,649. Ledbetter willfully failed to truthfully account for and pay over to the IRS the federal income taxes and Federal Insurance Contributions Act taxes. In total, Ledbetter willfully failed to truthfully account for and pay over employment taxes for the quarters ending Sept. 30, 2004, Dec. 31, 2004, and March 31, 2005. Ledbetter’s tax liability for these quarters is $185,008. Ledbetter was aware of the requirement that he pay quarterly employment taxes, and he willfully did not truthfully account for and pay over the tax even though he withheld these taxes from his employees.This case was prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.