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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Texas

FOR IMMEDIATE RELEASE
Monday, June 23, 2014

Former Lohn I.S.D. Business Manager Admits To Stealing More Than $500,000 From The School District

Patty E. Smith, age 58, of Lohn, TX, faces up to 15 years in federal prison and full restitution for embezzling more than $500,000 from the Lohn Independent School District (LISD) announced United States Attorney Robert Pitman and Internal Revenue Service-Criminal Investigation Special Agent in Charge R. Damon Rowe, Dallas Division.

Appearing before United States Magistrate Judge Mark Lane in Austin on Friday, Smith pleaded guilty to one count of tax evasion and one count of theft from an organization receiving federal funds.  By pleading guilty, Smith admitted that between September 2006 and September 2012, she stole LISD funds totaling $507,528.82 and used it for her personal benefit.  She also admitted to evading paying taxes on the embezzled funds, which constituted taxable income, by not disclosing it to the IRS on her yearly Income Tax returns. 

According to the factual basis filed in this case, Smith did not have signature authority over any LISD financial accounts, however, she had sufficiently gained the trust of the person with signature authority to the point that that person signed blank checks for funds that Smith would subsequently complete and make payable to either “cash” or fictitious payees.  Smith concealed her activities by recording false check amounts in the check register.  For years 2007 through 2011, Smith’s willful evasion of taxes on the funds she stole from LISD resulted in the underpayment of income tax in the amount of approximately $129,400.

Smith is on bond pending sentencing.  Sentencing is scheduled for August 11, 2014, before United States District Judge Lee Yeakel.

This case was investigated by special agents with the Internal Revenue Service-Criminal Investigation with the assistance of the Texas Rangers.  Assistant United States Attorney Matthew Devlin is prosecuting this case on behalf of the Government. 
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Updated December 15, 2014