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Press Release

Two Indicted And Two More Plead Guilty In Department Of Labor Fraud Cases

For Immediate Release
U.S. Attorney's Office, Eastern District of Tennessee

KNOXVILLE, Tenn. – On May 6, 2014, a federal grand jury returned two, one-count indictments against Kenneth A. Gianbolvo, of Knoxville, Tenn., and Shaun Hurst, of Sevierville, Tenn., charging both men with theft of government funds.

According to the indictment on file with the U.S. District Court, Eastern District of Tennessee, Gianbolvo is alleged to have embezzled more than $1000 from the U.S Department of Labor (DOL) from May 19, 2008, to May 16, 2009. The indictment against Hurst, also on file with the U.S. District Court, Eastern District of Tennessee, alleges that he embezzled more than $1000 from DOL, from Mar. 28, 2009, to Nov. 28, 2009.

Additionally, on May 6, 2014, John A. Savage and James Phillips waived indictment and each pleaded guilty to an information charging them both with theft of government funds. According to their plea agreements on file with the U.S. District Court, Eastern District of Tennessee, Savage and Phillips both received unemployment benefits from the state of Tennessee unemployment program. These unemployment benefits were supplemented with federal funds through the American Recovery and Reinvestment Act of 2009, which authorized 100 percent federal funding for unemployment benefits that they qualified for and received. An internal audit determined that each individual was overpaid unemployment benefits after failing to report his employment and earnings from his employer, violating the policies and procedures for receiving unemployment benefits. In his plea agreement Phillips admitted to obtaining unemployment insurance benefits to which he was unentitled. Savage also acknowledged in his plea agreement that he owed the overpayment.

If convicted, Gianbolvo, Hurst, Savage, and Phillips all face up to 10 years in prison, a fine of up to $250,000, a term of supervised release of up to three years, and a $100 special assessment. In addition to the criminal penalties, defendants faced a state-determined one-year ban from receiving unemployment benefits.

Unemployment benefits are designed to assist those who qualify under specific policies and procedures. Unemployment benefits fraud is a serious offense. Individuals who take advantage of this benefit program through theft, fraud, and lies, effectuated by hiding earnings, may be prosecuted and face both terms in prison and fines.

These charges are the result of an investigation by DOL- Office of Inspector General and Tennessee Department of Labor. Assistant U.S. Attorney Brooklyn Sawyers represents the United States.

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

Updated March 18, 2015