Man Sentenced to 2-years for Healthcare Fraud at Non-Profit

Edward Payton

The former Executive Director for the non-profit community mental health agency Mecklenburg County Open Door (“MOD”) was sentenced today in U.S. District Court to serve 18 months in prison for converting the funds of a health care benefit program and failing to file a tax return and pay taxes, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. District Judge Max O. Cogburn, Jr. also sentenced Edward Gerard Payton, 52, of Charlotte, to serve two years under court supervision after he is released from prison and ordered Payton to pay $131,169 in restitution.

U.S. Attorney Tompkins is joined in making today’s announcement by Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and Kay B. Jernigan, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

Payton was the Executive Director of MOD from 2006 until 2010.  In April 2011, Payton plead guilty to knowingly and willfully converting without authority moneys, funds, property, and assets of MOD and failing to file a tax return for 2008. During sentencing, Edward Payton admitted to unlawfully converting at least $147,000 by taking unauthorized pay “advances” from MOD, a health care benefit program which provides mental health services and housing to mentally ill individuals in the Charlotte area.

According to court documents and court proceedings, Payton also admitted to using an MOD corporate credit card and automobile for his personal use, in violation of MOD policy. In his plea agreement, Payton admitted that the total loss resulting from his criminal conduct at MOD was between $70,000 and $120,000 and that, as part of his criminal conduct, he abused his position of trust with MOD. Although Payton plead guilty to failing to file a tax return and pay taxes for tax year 2008, at sentencing the court found that Payton was responsible for failing to pay taxes for tax years 2007 and 2009.

At sentencing, Judge Cogburn noted, “It’s amazing to me that someone could go for a number of years and not file these [tax] returns.” In imposing a term of imprisonment, the Judge also observed that the criminal conduct “didn’t happen on just one day. [It] wasn’t a snapshot. It happened over a period of time.”

Upon designation of a federal facility, Payton, who is released on bond, will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The investigation was led by FBI and IRS. Both agencies are part of the Western District’s joint Health Care Fraud Task Force. The task force is a multi-agency team of experienced federal and state investigators and prosecutors, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future.

Man Convicted for Stealing over $318,000 from Matthews Children's Theatre

John Hurst

John Willis Hurst, 51, plead guilty to eight felony counts of Embezzlement before Judge Hugh B. Lewis.  Hurst embezzled over $318,000 from the Matthews Playhouse between 2002 and 2009 while volunteering as Treasurer. The Matthews Playhouse is a non-profit children’s theatre.  Hurst admitted that he forged signatures on Matthews Playhouse checks in order to pay his credit card bills, insurance bills and other personal expenses.

John Hurst will be imprisoned for an initial period of 12-16 months. Upon release, Hurst will be placed on 5 years of supervised probation. During the term of probation, Hurst will be required to make minimum monthly payments of $1,500 in an effort to make restitution to the victim in the total amount of $232,486.  To date, Hurst has paid $86,000 in restitution. If Hurst violates the terms of his probation, a judge may revoke it and order Hurst serve an additional 36-48 months in prison.

Charlotte Man Charged with Embezzling over 90,000

John Edward Dee

John Edward Dee, former CFO of the Harris Land Company, has been arrested and charged with embezzling $90,600 in additional salary.  He was arrested on April 26, 2011.

CMPD says an outside accountant was doing an audit on Harris Land Company in February and found that Dee had been receiving  unauthorized monies over the past two years. Dee managed the company's payroll and wrote unauthorized checks.

The CMPD Financial Crimes Unit seized several bank documents from John Dee and Dee admitted embezzling some of the money.  In the past two years, Dee bought a $500,000 home in Charlotte as well as another piece of property.

Bank Employee Charged with Unauthorized Access to Bank Computers

Rodney Reed Caverly, 53, of Mint Hill, entered a guilty plea today to a federal bill of information charging him with unauthorized access to one or more protected computers of a financial institution, in violation of federal law. The charged offense is punishable by up to five years in prison, a fine of up to $250,000 and a supervised release term after imprisonment of up to three years.

By law, Caverly also will be required to pay restitution. According to the bill of information, the Bank of America had employed Caverly for the purpose of maintaining and designing its computer systems, including computers utilized for conducting financial transactions at its ATM's.

Caverly devised a scheme and artifice to defraud Bank of America, that is, a scheme to deploy a malicious computer code to Bank of America’s protected computers and computerized ATMs for the purpose of causing the affected ATMs to make fraudulent and unauthorized disbursements of cash without any transactional computer record of said cash disbursements.

Bank of America utilized “protected computers,” as that term is defined in Title 18, United States Code, Section 1030(e)(2), in interstate and foreign commerce to provide automated banking services to its customers, including the disbursement of cash through computerized automated teller machines (ATMs.

From March 20, 2009 to October 11, 2009, Caverly knowingly and with intent to defraud accessed one or more protected computers, exceeding his authorized access, and by means of such conduct furthered the intended fraud and obtained something of value, specifically, United States currency in excess of $5,000 within a one-year time period.

During the plea hearing, the Government advised the Court that Bank of America reported a loss connected to Caverly’s scheme of $304,000 in cash from its ATMs. Cash totaling $167,010 was recovered from a location that Caverly identified to U.S. Secret Service agents.

Caverly is free on a $25,000 personal signature bond until the time of sentencing. A sentencing date has not yet been scheduled.

Pastor charged with embezzling $135,000

James Todd (J.T.) Worthey is charged with embezzeling over $135,000 from greater Mt. Zion Missionary Baptist Church.

According to a report by WCNC, the church eventually closed, but detectives investigated a span of 15 months when Worthey was pastor. During the time of the alleged embezzlement, former church members say they were punished by the pastor for asking questions about church finances.

Alice Davis, a former church member said she had asked about church money, and was excommunicated from the church by Worthey. Davis had been a member at Mt. Zion for 52 years. She was informed of the excommunication by letter. "[The letter] said that I was not welcome there. Why was that? Because I asked questions," said Davis.

Another church member, Kim Scott, said he was excommunicated for questioning the church's non-profit status, and was informed of the dismissal in the same way Davis was. "Actually, I got two letters," said Scott.

While members tried to discover what was going on with church finances, Worthey was allegedly committing embezzlement, which prompted the inquiries. Twice, court documents show the church was in foreclosure with $118,000 owed in 2004, and $143,000 owed in 2005.

Under the weight of debt the church was forced to close. Pastor Worthey then became a suspension assistant for Charlotte-Mecklenburg Schools.

On Wednesday, he was charged with embezzling $135,000 from Mt. Zion Missionary Baptist.
Worthey is suspended with pay from CMS pending the outcome of the investigation. Mt. Zion Baptist Church closed in late 2005, and reopened three weeks ago.

Additional Sources: News14 Carolina

Concord Man Embezzled $3.2M

An accountant from Concord, NC is charged with 15 counts of money laundering. Police say he embezzled $3.2 million of dollars from one client.

William Markham did accounting work for Failure Free Reading, a company that teaches reading skills to students.

The indictment says Markham laundered the funds through his personal checking account to buy large homes, boats and other luxury items. An investigation by the Internal Revenue Service led to the indictment.

If convicted, Markham faces maximum penalties of 10 years imprisonment on six counts, and maximum penalties of 20 years' imprisonment on the other nine charges.

Additional Sources:
News 14 Carolina
Charlotte Business Journal