Federal Halfway House and Former President Plead Guilty to Wire Fraud and Making False Statements
For Immediate Release
U.S. Attorney's Office, Western District of Virginia
One of First Cases Investigated by New Financial Fraud Investigator within United States Attorney’s Office
ABINGDON, Va. – The former president and director of Secor, Inc., a federal halfway house that contracted with the Federal Bureau of Prisons (BOP) to house inmates, pled guilty today to making false statements and committing wire fraud. The corporation, through its attorney, also pled guilty to those charges. The former president and director will serve at least one year in federal prison under the plea agreement.
Matthew Castle, 35, of Lebanon, Virginia, and Secor, Inc., each pled guilty today in federal court to one count of making materially false statements in a matter within the jurisdiction of the executive, legislative, or judicial branch of the United States and one count of wire fraud.
Under the plea agreements, Castle will serve between 12 and 21 months in prison, and Secor will serve a term of probation of one to five years. Additionally, Castle and Secor will pay $208,105 in restitution, forfeit $40,000, and pay an additional $30,000 in fines.
“This company and its former president and director were paid to house offenders for the Bureau of Prisons and instead of taking on that responsibility, they chose to defraud the American taxpayers and the Bureau of Prisons,” United States Attorney Christopher R. Kavanaugh said today. “This case was investigated internally using a U.S. Attorney’s Office financial fraud investigator and it represents a new beginning for the Western District of Virginia, one where financial crimes are investigated and prosecuted entirely within our Office.”
According to court documents, Secor was a residential reentry center, commonly referred to as a halfway house, for inmates from the BOP who were nearing the end of their federal prison sentences.
In 2018, Secor entered into a contract with the BOP that allowed some of the offenders under the care of Secor to be assigned to “home confinement,” meaning those offenders resided at an approved residence not owned by Secor. BOP paid Secor a per diem rate for offenders who resided at Secor’s facilities and a different per diem rate for those on home-confinement.
Under the terms of the contract, Secor was required to outfit home-confinement offenders with GPS monitoring equipment so the offenders’ whereabouts could be determined at all times. In addition, Secor personnel were required to personally visit each offender’s residence on at least a monthly basis to ensure the offender was living at the offender’s assigned residence, in a safe environment, and in accordance with applicable rules.
In fact, Castle and Secor failed to meet these requirements. For example, Secor did not outfit many of the home-confinement offenders with GPS monitoring and failed to conduct home visits as required. Nonetheless, Castle routinely completed documentation certifying that he had conducted such visits and noted no issues. In addition to signing these phony documents himself, Castle often wrote false observations like “things were going well,” and the offender “had no questions or concerns to address at the time.”
Each month, Castle submitted invoices to BOP for payments pursuant to the contract between Secor and the BOP. BOP then issued payments to Secor based on Castle and Secor’s representations that Castle and Secor were providing home-confinement services in accordance with the contract.
The case was investigated by the U.S. Attorney’s Office with the assistance of the Russell County Sheriff’s Office and the Bureau of Prisons.
Assistant U.S. Attorneys Whit Pierce and Randy Ramseyer are prosecuting the case.
Updated November 9, 2023