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Justice News

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

FOR IMMEDIATE RELEASE
Friday, September 12, 2014

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

In Austin today, 58-year-old Patty E. Smith of Lohn, TX, was sentenced to two years in federal prison and ordered to pay $ 636,475.82 restitution for embezzling from the Lohn Independent School District (LISD) announced United States Attorney Robert Pitman and Special Agent in Charge R. Damon Rowe, Internal Revenue Service Criminal Investigation, Dallas Field Office.

Smith was remanded to the custody of the U.S. Marshals Service following today’s hearing to begin serving her prison term.

“Ms. Smith took advantage of her position at Lohn ISD and abused the trust of the school district and all taxpayers by stealing federal money and using it for her own purposes.  IRS Criminal Investigation commends the Texas Rangers for their assistance in the investigation,” said Damon Rowe, Special Agent in Charge of IRS Criminal Investigation, Dallas Field Office.  “IRS Criminal Investigation remains steadfast on focusing our efforts to ensure that these types of crimes are investigated and those abusing the public trust are held accountable.”

In June, 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 $507,075.82 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.

This case was investigated by special agents with the IRS Criminal Investigation with the assistance of the Texas Rangers.  Assistant United States Attorney Matthew Devlin prosecuted this case on behalf of the Government.

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Updated December 15, 2014