Former Chairman Of The Board Of Payroll Services Company Pleads Guilty To Conspiracy Charges
Conspirators Stole more than $2 Million from Client Companies and Used the Money to Cover their Exorbitant Salaries
CHARLOTTE, N.C. – Frank Alton Moody, II, 56, of Arden, N.C., pleaded guilty to federal charges for his role in conspiring to steal over $2 million from client companies and using the money to fund their exorbitant salaries, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Two of Moody’s conspirators, Jerry Wayne Overcash, 67, of Charlotte, and John Bernard Thigpen, 60, of Rock Hill, S.C., previously pleaded guilty and were sentenced for their roles in the conspiracy.
U.S. Attorney Rose is joined in making today’s announcement by Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
According to documents filed with the court, Moody was the Chairman of the Board of CenterCede Services Inc. (CenterCede), a payroll services company with clients in Charlotte and elsewhere. CenterCede was established in August 2010 by Overcash and Moody, to assume business operations of The Resource Solutions Group (TRSG). Court documents in related cases indicate that, similar to CenterCede, TRSG had been a payroll services company until it was shut down by IRS in August 2010, for failing to pay more than $9 million in federal payroll taxes TRSG collected from its clients. Moody served as Chairman of the Board at TRSG.
Court documents show that from November 2010 to November 2011, CenterCede purportedly provided payroll preparation and processing services to its clients. As such, CenterCede collected funds from its clients to pay the client companies’ federal tax obligations, gross payroll for the clients’ employees, worker’s compensation, and unemployment insurance, among others, as well as fees due to CenterCede. Contrary to their representations to clients, the conspirators did not pay the clients’ federal taxes in appropriate amounts and by the applicable deadlines.
Instead, Moody and his co-conspirators agreed, with the intent to defraud the company’s clients and the IRS, not to remit to the IRS the full tax liabilities of CenterCede’s clients. Client funds were then diverted to pay the salaries of Moody, Overcash and others, and to cover CenterCede’s growing liabilities.
To keep the scheme afloat, the conspirators paid only those obligations necessary to keep their ongoing cash flow crisis a secret from clients. As reflected in court documents, the conspirators favored what they called “priority” clients, attempted to keep those priority clients from learning about monthly cash shortfalls and frequently paid those clients’ obligations ahead of other non-priority clients. “Priority” clients generally had large payrolls with deposits necessary to fund CenterCede’s short-term cash needs and keep the scheme afloat.
Court records show that when clients inquired about failures to pay obligations, the conspirators took steps to conceal the fraud by providing false excuses and misleading explanations. According to the indictment to which Moody pleaded guilty, when a client company asked why its tax payments had not been paid, Moody wrote “John [Thigpen] has told me it was a over site [sic] in the Tax department and all is fixed. No problems with [victim client company].” In truth and fact, that client’s taxes had been intentionally unpaid in favor of the payment of “priority” client obligations.
The conspiracy charge carries a maximum of five years in prison and a $250,000 fine. As part of his plea agreement, Moody has agreed to pay restitution to his victims, the amount of which will be determined by the Court.
The investigation for the case is being handled by USPIS and IRS-CI. Assistant U.S. Attorneys Corey F. Ellis and Taylor J. Phillips of the U.S. Attorney’s Office in Charlotte are in charge of the prosecution.