Jury Finds Former ThermoEnergy Corp. CFO Andrew Melton Guilty On Federal Charges Of Mail Fraud And Failure To Pay Employment Tax
LITTLE ROCK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, David Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI), and Christopher A. Henry, Internal Revenue Service (IRS) Special Agent in Charge, announced today that a federal jury found former ThermoEnergy Corporation Chief Financial Officer (CFO) Andrew Thurman Melton, 69, of Little Rock, guilty on twelve counts of mail fraud and five counts of failure to account for or pay to the IRS federal taxes withheld from employee paychecks.
United States District Judge Billy Roy Wilson presided over the three-day trial, which concluded Thursday with the jury verdict. Melton will be sentenced by Judge Wilson at a later date.
Melton served as CFO for ThermoEnergy Corp., a technology marketing company based in Little Rock, from 2005 through July 2009. The United States presented evidence which proved that Melton used approximately $109,000 of ThermoEnergy funds to pay for a personal debt arising from a judgment entered against him in a prior lawsuit. The prior judgment was for money Melton owed as a result of his failure to pay an interior decorator for work done at Melton’s home. This judgment resulted in an order garnishing Melton’s wages to satisfy the debt. Instead of complying with that order, however, Melton directed ThermoEnergy funds to be paid to satisfy the order.
The jury further found Melton guilty of failing to pay to the IRS approximately $1.8 million in payroll taxes withheld from ThermoEnergy employees’ wages. Beginning in 2005, Melton was responsible for the collection, accounting, and payment of federal withholding taxes, including Social Security withholding, federal unemployment taxes, and federal disability taxes on behalf of ThermoEnergy employees. During the last two quarters of 2005, all four quarters of 2006, 2007, 2008, and the first quarter of 2009, Melton failed to file IRS form 941 reporting the amounts withheld and failed to pay any of the required employee withholding taxes.
The statutory penalty for mail fraud, a violation of 18 U.S.C. § 1341, is not more than 20 years imprisonment, not more than a $250,000 fine, or both, and not more than three years supervised release. The statutory penalty for failure to pay employment taxes, a violation of 26 U.S.C. § 7202, is not more than five years imprisonment, not more than a $250,000 fine, or both, and not more than three years supervised release.
The investigation was conducted by the FBI and the IRS—Criminal Investigations. First Assistant United States Attorney Patrick C. Harris and Assistant United States Attorney Hunter Bridges prosecuted the case for the United States.