Thursday, August 19, 2010
Department of Justice
Acting United States Attorney Gregg L. Sullivan Eastern District of Tennessee
KNOXVILLE ACCOUNTANT CHARGED WITH FRAUD AND MONEY LAUNDERING
KNOXVILLE, Tenn--Ernest E. Choat, Jr., of Knoxville, Tennessee has been charged by a federal grand jury on 15 counts of securities fraud, 13 counts of wire fraud, and 3 counts of engaging in monetary transactions in criminally derived property. The indictment was returned on August 17, 2010, but was sealed until his arrest and initial appearance today.
According to the indictment, Choat was a certified public accountant (CPA) engaged in a business as E.E. Choat and Company in Knoxville. From September 2004 until approximately May 25, 2006, Choat devised a scheme to defraud David M. Lovett, the Lovett Family Trusts, and beneficiaries of the Lovett Family Trusts by directing the sale of securities held in Charles Schwab trust accounts, and then converting those proceeds from the sales to his own personal use, all without the knowledge and consent of David M. Lovett. Choat was previously engaged by Lovett to serve trustee for three trusts requested by Lovett, and opened a trust account at Charles Schwab for each of the trusts.
The indictment charges that on 15 separate occasions in 2005 and 2006, Choat sold stocks held in Charles Schwab accounts in the names of Andrew M. Lovett Trust, David M. Lovett Marital Trust, and S. Lewis Lovett Trust. Choat deposited the proceeds of the stock sales into accounts in his name or the name of his company, E.E. Choat, CPA, P.C. Additionally, the indictment charges that on three separate occasions, Choat transferred more than $10,000 in proceeds from his personal account to the account of Choat & Company.
This investigation was conducted by the United States Postal Service and Internal Revenue Service - Criminal Investigation. AUSA Greg Weddle will represent the United States.
Members of the public are reminded that an indictment is a form of accusation and is not evidence of guilt. The defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.