Source: https://klasing-associates.com/accountant-sentenced-embezzling-500k-healthcare-foundation/
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Accountant Sentenced After Embezzling Over $500K from Healthcare Foundation | Accountant Sentenced After Embezzling Over $500K from Healthcare Foundation |
Published by David Klasing at February 8, 2020
Kathleen Federico, 52, of Kansas City, Missouri, was recently sentenced by U.S. District Judge Greg Kays to 27 months in prison without the possibility of parole after pleading guilty to one count of wire fraud, a violation of 18 U.S. Code § 1341 (frauds and swindles). Formerly an accountant for St. Luke’s Foundation, a non-profit healthcare system that includes more than a dozen hospitals, Federico embezzled nearly $558,000, taking part in two scams between 2003 and 2017.
Accountant Receives 27-Month Prison Sentence in Wire Fraud Case
Federico pleaded guilty to one count of wire fraud in June 2019 after being charged via “information” – a type of written document that, like a tax indictment, formally notifies a defendant that criminal charges have been filed against him or her. The primary difference is that no grand jury vote is necessary for an information.
The charges focused on Federico’s career at St. Luke’s Foundation, where she worked as an accountant from May 7, 1999 through February 23, 2018, when she was fired after nearly 20 years. The information alleged – and Federico later admitted – that, beginning in June of 2003 and continuing for more than a decade through March of 2017, she used her position to embezzle a total of approximately $557,675. (In fact, a previous audit suggested that Federico may have in fact embezzled more than $1 million, but prosecutors lacked the evidence necessary for inclusion in the charges.)
The funds were embezzled through two separate but “related” schemes, according to a Department of Justice (DOJ) press release. Through the first scheme, Federico embezzled more than $452,000, writing herself checks and then covering the evidence – at least temporarily – by altering ledgers and invoices. The second scheme, which involved using foundation money to make personal credit card payments, yielded an additional $105,000.
The funds were spent on assorted personal expenses, including approximately $21,000 toward online “drug purchases,” $30,000 toward traveling, and $150,000 toward “shopping and retail.” Federico also took “more than $67,000 in cash,” in addition to making mortgage and utility payments.
The maximum prison sentence for wire fraud, which is a felony offense under 18 U.S. Code § 1341, is a staggering 20 to 30 years in prison, depending on the details of the offense. An offender can also be fined up to $1 million, which is an exceptionally high penalty even among serious crimes. (For context, the maximum criminal penalty for tax evasion – a felony punishable by up to five years in prison – is $100,000, unless the offender is a corporation. Note, also, that criminal penalties can be greatly compounded by additional civil penalties.)
Federico received a sentence of two years and three months in federal prison, without the opportunity for parole. In addition, she was ordered to pay restitution approximately equal to the amount embezzled.
Does IRS-CI Investigate Non-Tax Crimes?
Federico’s case was investigated by the Federal Bureau of Investigation (FBI). However, many “white collar” or financial crimes are investigated, among other agencies, by IRS-CI, which is the Criminal Investigation division of the Internal Revenue Service.
A formidable division of the IRS – its conviction rate exceeded 91% in fiscal year 2019 – IRS-CI works with the FBI and other law enforcement agencies to detect and intervene in criminal activity. IRS-CI agents, who are also called “special agents” (not to be confused with “revenue agents,” i.e. auditors), investigate a wide range of both tax and non-tax crimes, including but not limited to:
Cyber crimes (with a special focus on cryptocurrency, such as Bitcoin)
Money laundering, for instance, is classified as a non-tax crime. However, because of its massive tax and economic impacts, it falls within the scope of crimes that IRS-CI investigates.
To keep exploring this topic, refer to the following articles:
What everyday scenarios are likely to lead to an IRS criminal tax evasion investigation?
Tax Evasion Defense Attorneys Serving Northern + Southern California
At the Tax Law Office of David W. Klasing, we are criminal tax defense attorneys with over 20 years of combined experience fighting felony and misdemeanor charges, including tax evasion (26 U.S. Code § 7201), willful failure to file or pay taxes (26 U.S. Code § 7203), tax perjury (26 U.S. Code § 7206(1)), return preparer fraud (26 U.S. Code § 7206(2)), and tax obstruction (26 U.S. Code § 7212).
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Accountant Sentenced After Embezzling Over $500K from Healthcare Foundation was last modified: February 5th, 2020 by David Klasing