New York Investment Firm CEO Guilty of Defrauding 50+ Investors in Multi-Million Dollar Pre-IPO Scam
William Scruggs, age 46, and Paul Richardson, age 40, both of Macon, Georgia, were sentenced in the United States District Court on August 13, 2015, by the Honorable Marc T. Treadwell. Both Mr. Scruggs and Mr. Richardson had previously entered a plea of guilty to Conspiracy to Defraud the United States.
Mr. Scruggs received a sentence of 24 months in prison and Mr. Richardson received a sentence of 21 months in prison for his role in the offense. Mr. Richardson, who was on supervised release following his 2006 plea for Distribution of more than 50 Grams of Cocaine Base (crack cocaine), also had his supervised release revoked. Mr. Scruggs and Mr. Richardson must also jointly and severally pay a total of $282,561.26 in restitution.
Between July 2012 and January 2013, Mr. Scruggs received a total of 54 forged United States Treasury checks from Mr. Richardson, as well as other individuals. Mr. Richardson admitted that he brought between 12 and 15 forged Treasury checks to Mr. Scruggs. Mr. Richardson and the other individuals provided Mr. Scruggs the Treasury checks with a signed endorsement on the back of the check, which matched the name of the payee. Mr. Scruggs would then deposit the checks into the bank account for his business, Diamond Auto Painting, in Macon, Georgia. Mr. Scruggs claimed at the time of depositing that he had done work for the payee of the check, but later admitted that the checks were forged and fraudulent and that he had not met or provided services for the named payee.
Investigators were able to determine that many of the Treasury checks deposited in Mr. Scruggs’ Diamond Auto bank account were generated by tax returns which used stolen identities. There was no evidence to suggest that Mr. Scruggs and Mr. Richardson were involved in the identity theft or filing of the fraudulent tax returns.
Mr. Scruggs would retain 25% of the amount of the checks for himself. Mr. Richardson admitted that he retained 10% of the value of the checks he provided to Mr. Scruggs, and returned the remaining portion of the check to another individual. The total amount of the 54 Treasury checks was $282,561.26. Mr. Richardson admitted that the loss amount attributed to the checks he provided to Mr. Scruggs was more than $30,000, but less than $70,000.
“Today’s sentencing demonstrates IRS Special Agent’s continued commitment to pursue refund fraud,” said Veronica F. Hyman-Pillot, Special Agent in Charge IRS Criminal Investigation. “The use of the innocent taxpayer’s identities to generate a fraudulent tax refund check is a crime. IRS-Criminal is focused on bringing those who conspire to prepare, file, or negotiate fraudulent refunds proceeds to justice.”
This case was investigated by the United States Secret Service, the Internal Revenue Service- Criminal Investigations, the United States Department of the Treasury- Office of Inspector General, and the Macon Police Department. Assistant United States Attorney Beth Howard prosecuted the case for the Government.
Inquiries regarding the case should be directed to Pam Lightsey at the United States Attorney’s Office at 478-752-3511.