CEO Pleads Guilty to Embezzling at least $208,000 from KC Company
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that the former CFO/CEO of a Kansas City, Mo., company has pleaded guilty in federal court to a wire fraud scheme in which he embezzled at least $208,000 and as much as $338,221.
James Anthony Kilkenny, 50, of Kansas City, pleaded guilty on Wednesday, April 23, 2014, before U.S. District Judge Dean Whipple to one count of wire fraud.
Kilkenny was an employee of Waechtersbach USA, Inc. from December 1998 until his termination in April 2012, at which time he was the CFO/CEO. Waechtersbach USA, located at 4201 N.E. 34th Street, Kansas City, Mo., is a distributor/vendor that purchases products from the German and Asian companies to distribute to U.S. retailers. Waechtersbach USA’s parent company is located in Germany.
By pleading guilty, Kilkenny admitted that he engaged in a nine-year-long, multi-pronged plan to embezzle from Waechtersbach between 2003 and 2012. Kilkenny admitted that, during this time, he overpaid his own salary by $133,592. In 2006, Waechtersbach management notified Kilkenny that he was required to take a pay cut from $135,000 to $115,000 because of company-wide cutbacks. Starting the following year on Jan. 15, 2007, however, Kilkenny began increasing his salary and overpaying himself without the company’s knowledge. He accomplished this by paying himself an extra $35,000 that was broken down into two accounts and disguised as “warehouse” and “office” expenses.
Kilkenny also admitted that he used company funds to pay back loans he had taken against his 401K account ($75,169 loss) and issued unauthorized company checks to himself and others ($29,783 loss). The government contends that Kilkenny also used company funds to pay for his dependents’ health insurance without Waechtersbach’s knowledge or express authorization ($12,041 loss) and used the company’s travel credit card for personal, local expenses ($87,633 loss).
Kilkenny admitted the loss was at least $208,762; the government believes the total amount of loss was $338,221. Under the terms of today’s plea agreement, Kilkenny must forfeit to the government a money judgment of at least $208,825, up to $400,000, depending on the loss amount determined by the court.
As CFO/CEO, Kilkenny was the person tasked with reporting Waechtersbach’s financials to the company’s owner. His embezzlement came to light when the owner of the company was notified by the U.S. Customs Department that the company had received an $80,000 import tax refund. The owner became suspicious and came to Kansas City to investigate. An internal investigation revealed that Kilkenny received the $80,000 refund but reported that the refund was for only $8,000. Kilkenny instructed the employees in the Kansas City office to lie about the amount if asked. The company then began investigating all of Kilkenny’s spending, which led to the discovery of over $200,000 that Kilkenney had embezzled.
Under federal statutes, Kilkenny is subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the Kansas City, Mo., Police Department.