THOMPSON
& BAILEY SENTENCED IN $6.7 MILLION TIMBER FRAUD SCHEME
January 21, 2004
U.
S. Attorney's Office
Northern District of Georgia
75 Spring Street, S.W. - Suite 600
Atlanta, Georgia 30303
Tel: 404.581.6000
Fax: 404.581.6181
Northern District of Georgia
75 Spring Street, S.W. - Suite 600
Atlanta, Georgia 30303
Tel: 404.581.6000
Fax: 404.581.6181
FOR
IMMEDIATE RELEASE
William S. Duffey, Jr., United States Attorney for the Northern District of Georgia and Gail J. Kenney, Acting Special Agent In Charge, Internal Revenue Service, Criminal Investigation, announce that JOHN F. THOMPSON, III, 54, of Palmetto, Georgia, was sentenced today by United States District Judge Orinda D. Evans, after jury conviction on charges of conspiracy to defraud, mail fraud, and money laundering; and ANNIE M. BAILEY, 59, of Musella, Georgia, was sentenced by Judge Evans after pleading guilty to tax evasion and conspiracy to defraud. According to Duffey:
THOMPSON was sentenced to 5 years, 10 months in federal prison, ordered to pay restitution in the amount of $6,731,472, ordered to perform 100 hours of community service, and ordered to serve 3 years supervised release.
BAILEY was sentenced to 1 year, 11 months in federal prison, ordered to pay restitution in the amount of $6,731,472, ordered to perform 100 hours of community service, and ordered to serve 3 years supervised release.
THOMPSON was convicted by a federal jury on August 26, 2003, after a trial over a two-week period. The jury deliberated fewer than three hours before reaching its verdict. According to the indictment handed down on November 13, 2002, and evidence at trial, from the late 1980's through December 1997, THOMPSON conspired with BAILEY to defraud saw mill companies. BAILEY was also indicted by a federal grand jury on September 11, 2002, for violations of tax laws, pleaded guilty on December 17, 2002, and testified for the United States at trial.
THOMPSON and BAILEY devised a scheme to defraud a saw mill, and illegally obtained money from the mill by false and fraudulent representations. THOMPSON and BAILEY created a system by which they received numerous payments in the form of checks for non-existent loads of timber ("phantom timber loads"). The saw mill, located in Barnesville, Georgia, had been owned by Procter & Gamble, which sold it to Weyerhaeuser in late 1992. According to evidence at trial, the companies were defrauded of over $6.7 million. THOMPSON owned and operated timber supply businesses in Palmetto, Georgia, including Thompson Timber Company, Triple T Timber Company and Leigh Creek Forest Products, Inc., through which defendant THOMPSON sold timber to saw mills, including the Barnesville saw mill. From around 1988 through 1997, BAILEY was employed by the Barnesville saw mill as a scale house operator. Her job responsibilities included weighing timber trucks to determine the weight of timber being sold to the Barnesville saw mill and creating a timber scale ticket. The Barnesville saw mill used those timber scale tickets to pay the timber suppliers.
The evidence showed that THOMPSON and BAILEY submitted to the Barnesville saw mill timber scale tickets for payment, which contained false statements and representations of material facts, in that the scale tickets actually represented phantom timber loads. THOMPSON generally provided or caused to be provided information for the false and fraudulent tickets, including the tracts and counties from which the timber purportedly was cut. BAILEY provided the weight information for the false and fraudulent tickets, including gross and tare weights of the trucks which purportedly hauled the timber, and testified as such at trial.
On a weekly basis, BAILEY generally telephoned THOMPSON's business with the total net weight or tonnage of the phantom timber loads for that week, then she would send the false and fraudulent tickets via the United States mail from Musella, Georgia, to THOMPSON's business in Palmetto, Georgia. Based on the total weight information, defendant THOMPSON paid her for her role in the scheme with checks made payable to L.B. Howard, a nominee name THOMPSON and BAILEY had agreed to use to conceal the fraud. THOMPSON then sent the checks to a post office box in Musella, Georgia, via Express Mail. The Barnesville saw mill sent payments for the false and fraudulent timber scale tickets via the U.S. Mail to THOMPSON's businesses in Palmetto, Georgia.
The case was investigated by Special Agents of the Internal Revenue Service, Criminal Investigation and Revenue Agents of Internal Revenue Service, SB/SE Division.
United States Attorney William S. Duffey, Jr., and Assistant United States Attorney Phyllis B. Sumner prosecuted the case.
For further information please contact William S. Duffey, Jr., United States Attorney or F. Gentry Shelnutt, Chief, Criminal Division, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.