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Thursday, October 21, 2010

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee


MORRISTOWN MOTHER AND SON ARRESTED ON $1.5 MILLION CHURCH FRAUD AND MONEY LAUNDERING CHARGES

GREENEVILLE, Tenn.- A federal grand jury in Greeneville returned a five-count indictment on October 14, 2010 against Barbara D. Whitt, 69, and her son Michael Dean Whitt, 43, both of Morristown, Tenn., for devising a scheme to obtain money in the custody of SunTrust Bank by false pretenses and conspiring to do the same as well as conspiring to engage in money laundering. Michael Whitt was also charged with engaging in financial transactions designed to avoid financial reporting requirements and conducting a transaction involving over $10,000 in criminally derived property. After their arrest this morning by Internal Revenue Service - Criminal Investigation (IRS-CI) agents and Morristown Police Department officers, the Whitts appeared in court this afternoon before U.S. Magistrate Judge Dennis H. Inman and entered pleas of not guilty to the charges in the indictment. The Whitts were released pending trial, which has been set for March 7, 2011, before Senior District Judge Leon Jordan in Greeneville, Tennessee.

The indictment alleges that Barbara Whitt and Michael Whitt devised a scheme to obtain money from a checking account of First Baptist Church of Morristown, Tenn., at SunTrust Bank. Barbara Whitt, who was employed as the financial secretary for First Baptist Church, caused over 1,600 fraudulent checks totaling over $1.5 million to be written on a church checking account at SunTrust Bank over a 34 month period beginning in July 2007. Barbara Whitt made false representations to church members as to the purposes of the checks, which were made payable to “Cash,” to induce them to sign the checks, to include claiming the checks were to move funds from one church checking account to another account. Barbara Whitt then altered the checks to include her name as payee and cashed the checks, continuing until the scheme was discovered in early May 2010.

The indictment further alleges that the Whitts conspired to launder the proceeds of the fraud, to include conducting financial transactions to conceal the source of the illegallyobtained moneyand structuring transactions to avoid Federal reporting requirements for cash transactions. Michael Whitt is charged with structuring a financial transaction with a Morristown car dealer in December 2009 to avoid a Federal reporting requirement and conducting a transaction with a White Pine boat dealer in April 2010 involving $14,000 in cash obtained through the fraud.

If convicted, the Whitts face terms of up to 30 years in prison for the bank fraud charges and up to 20 years in prison on the money laundering charges as well as fines of over a half million dollars and forfeiture of property derived from the fraud.

“Our office will aggressively prosecute those who engage in financial fraud and, if they are convicted, will seek restitution as a part of their punishment to make the victims of these crime whole,” said United States Attorney Bill Killian.

This indictment is the result of an investigation by the Morristown Police Department and IRS-CI. Assistant U.S. Attorney Neil Smith will represent the United States.

Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.

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