L. Brian Whitfield, Former Managing Partner Of Sommet Group, Convicted By Federal Jury In $15 Million Fraud Scheme
L. Brian Whitfield, 49, formerly of Franklin, Tennessee, was convicted by a federal jury on Friday, after an eight-day trial, of 14 fraud-related counts, announced David Rivera, United States Attorney for the Middle District of Tennessee. The jury found Whitfield guilty of conspiracy, wire fraud, theft from an employee benefit program, filing a false tax return, and money laundering.
“Having your corporate name in lights will not insulate its principles from federal prosecution if, through fraud, you steal the health insurance, retirement, and tax contributions of companies and citizens of the Middle District,” stated United States Attorney David Rivera. “This type of corporate fraud will not be viewed as the cost of doing business by the United States Attorney’s Office and its law enforcement partners.”
The evidence during the trial before U.S. District Court Judge Todd J. Campbell established that Whitfield controlled the finances and funds of the Sommet Group LLC, a payroll processing company that operated in Franklin, Tennessee. From 2008 until 2010, Whitfield diverted millions of dollars of client funds that had been earmarked to fund client employee retirement accounts, to pay health claims, and to pay taxes. Instead of using these client funds in the manner in which Sommet had contracted, Whitfield diverted millions of dollars to prop up affiliated companies that he controlled and spent millions of dollars to acquire the naming rights of Nashville’s professional hockey arena, which came to be known as the Sommet Center. Whitfield also diverted client money to pay for personal expenses, including purchasing a $430,000 houseboat, a $99,000 ski boat, luxury clothing and the construction of a $150,000 pool in his backyard.
As a result of Whitfield’s fraud, retirement funds were not fully deposited into the accounts of employees whose paychecks were processed by Sommet, medical and prescription drug claims by employees were not fully paid, and taxes owed by clients to federal, state, and local governments went unpaid.
The evidence at trial also proved that Whitfield vastly underreported wages and taxes on Sommet’s quarterly employer tax returns that he personally prepared and filed. Across six quarters from 2008 – 2010, Sommet paid more than $83 million in wages to its employees and the employees of its clients, but Whitfield reported less than $4 million in wages to the IRS, resulting in an underpayment of more than $20 million in taxes.
“Having your corporate name in lights will not insulate you from federal prosecution if, through fraud, you steal the health insurance, 401 K retirement, and tax contributions of companies and citizens of the Middle District,” stated United States Attorney David Rivera. “This type of corporate fraud will not be viewed as the cost of doing business by the United States Attorney’s Office and its law enforcement partners.”
Whitfield will be sentenced by Judge Campbell on January 26, 2015. Whitfield faces up to 20 years in prison on each of three counts of wire fraud, up to 10 years in prison on each of four counts of money laundering, up to 5 years in prison on a conspiracy count and on each of three counts of theft from an employee benefit plan, and up to 3 years in prison on each of four counts of filing a false federal tax return. He also faces fines and will be ordered to pay restitution to his victims. In addition, the jury specified that Whitfield should forfeit $1.8M of proceeds from his offenses.
In July 2013, D. Edwin Todd, a part owner of Sommet, and Marsha Whitfield, Sommet’s Vice President of Payroll, each pleaded guilty to one count of conspiracy for their roles in the scheme orchestrated by Brian Whitfield. Both Todd and Marsha Whitfield are awaiting sentencing.
This case was investigated by agents with the Internal Revenue Service Criminal Investigation, the Federal Bureau of Investigation and the Department of Labor, Employee Benefits Security Administration. The case was prosecuted by Assistant U.S. Attorneys William F. Abely, Kathryn Ward Booth, Sandra G. Moses, and Stephanie N. Toussaint.