District Man Pleads Guilty To Fraud Charges In $3 Million Embezzlement Scheme-Defendant Bought House And Trips To Las Vegas, Atlantic City, Miami, And Hawaii-
WASHINGTON – Howard E. Person, Jr., 36, of Washington, D.C., pled guilty today to fraud charges stemming from his embezzlement of $3 million from a small business in the District of Columbia, using his employer’s money for the purchase of a house, trips to casinos in Las Vegas and Atlantic City, and other personal expenses.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD), and Kathy A. Michalko, Special Agent in Charge, Washington Field Office, U.S. Secret Service.
Person pled guilty in the U.S. District Court for the District of Columbia to Interstate Transportation of Money Taken by Fraud. The Honorable Reggie B. Walton scheduled sentencing for August 8, 2014. Under federal sentencing guidelines, Person faces a likely range of 46 to 57 months in prison. As part of his plea, person must pay $3.2 million in restitution.
According to the government’s factual proffer, Person was hired to be the Finance Director of a small business in the District of Columbia. As the Finance Director, Person managed and maintained all of the financial accounts and records for the company. He was responsible for and oversaw the company’s payroll, accounts receivable, accounts payable, invoices, bank accounts, loans, and expense payments. From March 2008 to September 2011, Person diverted money from the company to another account which he exclusively controlled in order to embezzle money from the company. He accomplished the theft by opening a bank account in the name of the company but with himself as the sole person with authority to conduct financial transactions on the account. The owner of the company was not aware of this account and did not authorize Person to maintain a company account solely in his exclusive control.
Person then obtained payment checks which had been mailed or delivered from the company’s clients for payment of work performed; instead of depositing the checks into the authorized company bank account, Person caused them to be deposited into the secret account over which he had exclusive control. Person arranged for clients to make electronic payments to the secret account instead of the authorized account for work performed by the company.
Person also arranged for a finance company to send money to the secret account through its system of financing Accounts Receivable for expected payments for work performed by the company, without the knowledge and permission of the owner.
Through this method of depositing checks, diverting client payments, and financing loans, Person obtained in the secret account approximately $6,545,000, which was due and owing the company.
In order to conceal the theft, Person transferred approximately $3,336,000 from the secret account to the company-authorized account and at times paid legitimate company expenses. He also used fake invoices substantially underreporting the amounts of money due and owing to the company. In this way, Person was able to trick the owner into believing that the amounts of deposits into the authorized account matched the incoming money as reflected on the fake invoices.
Person also obtained debit cards on the secret account enabling him to charge goods and services to be paid by the money in the secret account which was funded by money he stole from the company. Person spent the $3,209,000 in stolen money for his own personal business and enjoyment, including: purchasing his home in the District of Columbia, in an amount in excess of $340,000; paying for trips to Las Vegas, Atlantic City, Miami, the Dominican Republic, and Hawaii; transferring money into his personal bank account and into his side-line business account; funding parties and shows; and causing withdrawals of over $55,000 in cash from ATMs and over $35,000 in debit card purchases at casinos in Las Vegas and Atlantic City.
In announcing the plea, U.S. Attorney Machen, Chief Lanier, and Special Agent in Charge Michalko expressed appreciation for the work performed by MPD detectives from the Financial Crimes and Fraud Unit as well as by the Special Agents and financial analysts from the U.S. Secret Service. They also acknowledged the efforts of those who are working on the case from the U.S. Attorney’s Office, including Criminal Investigator Juan Juarez, Paralegal Specialists Donna Galindo and Corinne Kleinman, Assistant U.S. Attorneys Christopher Kavanaugh and Anthony Saler, former Assistant U.S. Attorney Mary Chris Dobbie, and Assistant U.S. Attorneys Virginia Cheatham and Bryan Seeley, who are prosecuting the case.14-116