Former University Of Louisville Executive Sentenced To 63 Months In Prison For Tax Fraud And Embezzling Funds Tied To UofL Medical Groups
Diverted $2.8 million for his personal use
Failed to report $2,470,735 to Internal Revenue Service
Ordered to pay $2,810,201.53 in restitution
LOUISVILLE, Ky. – A former University of Louisville accountant, promoted to Executive Director of the Department of Family & Geriatric Medicine at the University of Louisville School of Medicine (DFGM) was sentenced today, in U.S. District Court, by Senior District Judge Charles R. Simpson III, to 63 months in prison and ordered to pay $2,810,201.53 in restitution for tax fraud and embezzling funds tied to University of Louisville medical groups, announced Acting U.S. Attorney John E. Kuhn, Jr.
As part of the nearly six year scheme, Perry Chadwick Vaughn, 37, of Sellersburg, Indiana, diverted contractual checks and patient payments to the University Family and Geriatric Medicine Associates account then withdrew $2,809,489 for his personal use and benefit.
“Mr. Vaughn took advantage of his position of trust to steal from one of our most valued public institutions, the University of Louisville, as well as University-affiliated physician practice groups that serve the community by providing geriatric and primary care health care services,” stated Acting U.S. Attorney John E. Kuhn, Jr. “The 2.8 million dollar loss in this case is another dramatic reminder of what can happen when raw, unmitigated greed and selfishness finds opportunity in an organization with inadequate fiscal oversight. We do hope that the University’s recent and ongoing efforts to improve its financial management will end the string of thefts and embezzlements it has suffered over recent years. I must also commend the University of Louisville Police Department for providing invaluable assistance to the federal law enforcement agencies during the investigation.”
“As we investigate these insider threat cases where trusted employees steal from their employers, we will continue to urge business owners to have independent third party reviews of their finances. The US Secret Service and its Kentucky Electronic Crimes Task Force partners will vigilantly investigate these criminals to be sure they are brought before the justice system, making every attempt to make victims whole and to ensure these crimes do not go unpunished,” stated Acting Special Agent in Charge Craig Hutzell, United States Secret Service, Louisville.
Vaughn previously pleaded guilty to a seven-count federal indictment which included charges of theft and bribery in programs that receive federal funds, money laundering, mail fraud, and filing false federal income tax returns.
Specifically, from January 2007 through August 2013 Vaughn defrauded the Department of Family and Geriatric Medicine at the University of Louisville School of Medicine (DFGM-UofL) and its affiliated private physician practice groups (collectively “DFGM-Practice Groups”). While working as the executive director for DFGM-UofL and the business manager form DFGM-Practice Groups Vaughn stole approximately $2,810,201.53 through the use of the United States mail. Vaughn fraudulently stole contractual checks issued to DFGM-UofL totaling $666,810.11. Vaughn also stole $604,025.57 in patients payments to DFGM-UofL. In addition Vaughn stole another $1,538,654.24 directly from DFGM-Practice Groups’ accounts. During the scheme Vaughn caused T.J. Samson Community Hospital to mail a check for $37,750 that he ultimately stole.
During the course of the scheme to defraud both DFGM-UofL and DFGM-Practice Groups Vaughn concealed his theft through a number of means including the following: he created false bank reconciliations to hide the issuance of checks to himself and he created false bank statements to hide the issuance of checks to himself. In all instances, the financial transactions were conducted with Republic Bank and Chase Bank, federally insured financial intuitions.
On February 19, 2009, Vaughn knowingly filed a false U.S. Individual Tax return for calendar year 2008 in that it failed to report $377,492 in total income. On January 31, 2010, Vaughn knowingly filed a false U.S. Individual Tax return for calendar year 2009 in that it failed to report $610,470 in total income. On February 22, 2011, Vaughn knowingly filed a false U.S. Individual Tax return for calendar year 2010 in that it failed to report $160,121 in total income. On January 23, 2012, Vaughn knowingly filed a false U.S. Individual Tax return for calendar year 2011 in that it failed to report $546,022 in total income. On March 21, 2013, Vaughn knowingly filed a false U.S. Individual Tax return for calendar year 2012 in that it failed to report $776,660 in total income. Each of the returns was verified by a written declaration that it was made under the penalty of perjury and Vaughn knew in each instance that he was omitting reportable taxable income.
This case was prosecuted by Assistant United States Attorney Bryan Calhoun and was investigated by the University of Louisville Police Department, the United States Secret Service, the Internal Revenue Service, Criminal Investigations, and the United States Postal Inspection Service.