Kathryn Stayton, the former manager of the Frank Fletcher Ford accounting division in Joplin, pleaded guilty this morning to one count of wire fraud after reaching a plea bargain arrangement with the government.
According to documents filed in U. S. District Court for the Western District of Missouri, Ms. Stayton embezzled $88,070.06 from Frank Fletcher Ford between September 2009 and September 2011. She wrote 131 checks totaling $46,668.96 to herself or to family members, according to the court documents, and took $41,365.10 in cash. She also embezzed $13,079.34 from Credit Cars of Joplin, the place where she had worked before taking the job at Frank Fletcher Ford.
The original indictment charged Ms. Slayton with 10 counts of wire fraud.
Judge David P. Rush accepted the plea at the conclusion of an 11-minute hearing in the federal courts building in Springfield.
Ms. Stayton's crimes were described in the plea agreement document:
The United States Secret Service, Springfield Resident Agency was contacted by Detective William Davis of the Joplin Police Department regarding a wire fraud and bank fraud scheme with a total loss of $101,309.40. The target of the investigation is Kathryn Stayton, who working as a controller at Fletcher Auto Group, in Joplin, Missouri, and Credit Cars of Joplin.
While working there, Stayton developed a fraudulent scheme in which she transferred company funds to her own personal bank accounts from business accounts, and disguised the transactions as legitimate. Stayton admitted to forging the names of co-workers onto documents and business checks, allowing her to fraudulently transfer money from business accounts. Stayton also admitted to stealing cash from the accounts receivable and attempted to disguise her activities by forging company documents from September 2009 until December 2011.
From September 2009 until September 2011, Stayton was employed by Fletcher Auto Group, namely Fletcher Ford in Joplin, MO, as Controller to manage the accounting department, ultimately responsible for the financial activities of the Fletcher Ford Dealership. Stayton’s employment duties consisted of approving invoices, deposits, and disbursements, delivering deposits to the bank as needed, making journal entries, preparing monthly financial statements and all supporting reports, receiving bank statements, and preparing bank reconciliations. As Controller, Stayton had access to the dealership’s blank disbursement check stock and was an approved signor of manual checks. All payroll checks are issued from the dealership’s home office via direct deposit. However, the dealership allows employees to personally pay for authorized expenses and receive a manual expense reimbursement check for these expenses. The dealership’s policy requires two signatures on each manual check, regardless of amount.
The Fletcher Auto Group does not have an annual audit completed by an independent accountant.
On September 28, 2011, Stayton was terminated from Fletcher Ford for reasons unrelated to the fraudulent scheme. After an internal audit of the company’s accounting records was initiated by Stayton’s replacement, it was discovered that Stayton began embezzling monies from the dealership as early as September 2009.
In her scheme, Stayton utilized a variety of methods to disguise that she was embezzling funds. The first method involved Stayton generating checks from Fletcher Auto Group’s Bank of America account, made payable to herself or her mother, Virginia Killebrew, on an account shared with Stayton.
A second method was the stealing of cash by receiving payments from vendors, keeping the cash payments, and falsifying entries in the company’s accounting system. Vendors were able to provide proof that their payment to the dealership was made in full as their checks had cleared the vendor’s bank account. Further review, indicated that the vendors’ checks were transposed for cash from the
daily receipts and subsequently not recorded as paid in full on the vendors’ outstanding balances. A third method of embezzlement was the stealing of cash via a single cash transaction from a customer intending to use the cash as down payment. Stayton took the cash and never reported having received it.
A review of documents provided by an external audit, performed by RGL Forensics, reveals that Stayton generated checks from Fletcher Ford’s manual expense account, which she made payable to herself or her mother, Virginia Killebrew. Typically, the dealership authorizes expense report checks to employees for nominal expenses such as travel, conferences, supplies, and other authorized miscellaneous dealership expenses. Most reimbursable expenses are under $100 unless previously approved. Once an expense report is submitted and approved, a check to the requestor is printed on company check stock and must be signed by at least two approved check signors. As controller, Stayton was an approved check signor.
A review of checks payable to Stayton from the expense account of Fletcher Auto Group from September 2009 to September 2011 reveals that many of the checks did not have dual signatures. Also, many of the checks were for amounts in excess of normal expense reimbursements. Many of the expenses were for unauthorized costs. Upon further review of checks with the proper dual signatures, RGL Forensics noticed several of the signatures looked different from check to check, but appeared to be the same person’s name. Signature documentation was collected from the dealership of all approved check signors and an analysis resulted in RGL Forensics’ claim that several secondary signatures had been forged. Employees whose signatures were found on the checks were requested to review the checks and verify their authenticity. One employ, whose name was signed several times, was able to confirm that he had signed only one of the questioned signatures. The investigation confirmed that the other questioned signatures were forged.
A total of seventy (70) unauthorized checks were written to Kathryn Stayton for a total of $19,895.72. A total of sixty-one (61) checks were written to Virginia Killebrew, Stayton’s mother, for a total of $26,769.24. The back of checks made payable to Stayton and Killebrew provided a routing number of XXXXX3641, which was later discovered to be the personal Southwest Missouri Bank Accounts of both Kathryn Stayton and Virginia Killebrew. In addition to the unauthorized checks, a total of twenty-three (23) undeposited cash receipts were illegally obtained by Stayton for a total of $36,365.10. These cash receipts were then cleared in the company books by Stayton via journal entries recording the receipt of new and used car inventory. Additionally, Stayton illegally obtained $5,000 related to undeposited manual cash receipts. Bays was able to confirm that the money was to be used as down payment on a vehicle purchased from the dealership but Stayton received the $5,000 cash, which was ultimately not deposited into the company bank account. A total of $88,230.06 is attributed to Stayton’s misappropriation of funds from Fletcher Ford.
A review of Stayton’s bank records, as well as those of her mother, from Southwest Missouri Bank in the name of Kathryn Stayton and Virginia Killebrew determined that a total of one hundred thirty-one (131) checks in the amount of $46,664.96, were drawn on Fletcher Ford’s account
(#XXXXXXXX2631) at Bank of America, and were deposited into Stayton’s personal account. Furthermore, forty-three (43) monthly payments were made from Stayton’s account to Santander Consumer USA, Inc. as payment on a vehicle loan in the amount of $23,042.65 during the same period of time as the deposits of fraudulently obtained funds.
On February 14, 2012, subpoenaed documents were received by Santander Consumer which confirmed that at least 43 payments had been made from Stayton’s bank account to pay for a 2004 Ford F-150 SuperCrew Cab, which was registered to Stayton. On 02/23/12, the reporting agent applied for a seizure warrant based on this information. The seizure warrant was issued by Judge England and, on 02/27/12, the vehicle was seized.
On February 28, 2012, Stayton contacted the Special Agent Dan Allgeyer of the United States Secret Service and agreed to meet at the Joplin Police Station. At that time, Stayton handed in the keys to the vehicle voluntarily and removed her personal items from the vehicle. Stayton agreed to speak to SA Allgeyer about the case. SA Allgeyer reported the contents of the interview as follows:
Stayton stated that she knew why we wanted to speak with her, referring to her embezzlement from Fletcher Ford. She stated that “(the fraudulent activity) was all me.” She claimed to have no idea how much money she had stolen, but admitted to the possibility that it had reached more than $100,000.
When asked if she was ever scared of losing her job, she stated that she “knew it was coming for about two years (due to the fraudulent scheme).”
Stayton claimed that she began stealing money from Fletcher Ford because of her out-of-control personal bills.
Stayton admitted to using the proceeds of the fraudulent scheme to purchase the Ford F-150 that the reporting agent seized on the same date of this interview. Stayton also claimed to have used the money for bills, gambling, and miscellaneous merchandise.Stayton claims that her husband, Glen, and her mother do not know anything about the fraudulent scheme and did not have direct access to any of the proceeds. Stayton, who is in charge of the family’s finances, stated that she mostly used ATM’s to receive cash, which she then used on her own without her family’s knowledge. Stayton also explained
that, although she had written checks to an account in her mother’s name, the account is held by both her and her mother. No suspicion was raised because Stayton would remove the money from her mother’s account before her mother would recognize its presence.
Stayton also claims to have taken care of all of her mother’s finances.
Stayton admitted to having worked at Credit Cars of Joplin and to defrauding them using a similar fraudulent scheme. Stayton did not know exactly how much she had taken from Credit Cars of Joplin, but admitted that approximately $15,000 “sounded about right.”
When asked about how she carried out the scheme, Stayton explained that she took cash from Fletcher Ford’s new vehicle sales. When a sales person would give cash to Stayton as payment on a new vehicle, Stayton would take most of the cash and manipulate rebates to reconcile the account of the new customer, therefore, bringing the customer’s account to the expected balance.
When asked about the expense checks from which she had accumulated much of the fraudulent funds, Stayton admitted to having forged the checks in question, and stated that “a lot were passed.” Stayton would conceal the checks using the headers “We Owe” and “Rebates” as the reason for the checks.
Following the interview with Stayton, the US Secret Service received a Joplin Police report from Detective Ron Buchanan regarding Credit Cars of Joplin, the defendant’s place of work after being fired from Fletcher Ford. According to the report, Mark Hendren, co-owner of Credit Cars of Joplin, stated that on December 5, 2011, he was made aware of some discrepancies in the bank reconciliation for November 2011. Hendren called a meeting consisting of several managers, to include Stayton, the controller for the company. After approximately one hour of investigating the discrepancies, Stayton left the building and did not return. Several more discrepancies were found and, although many attempts were made to contact Stayton, she refused to cooperate.
Credit Cars of Joplin conducted an internal investigation which concluded that between October 27, 2011 and December 2, 2011, Kathryn Stayton was responsible for taking cash from deposits which she made on behalf of the company to a Southwest Missouri Bank account.
On November 01, 2012, SA Allgeyer contacted Mark Hendren, who described Stayton’s fraudulent scheme at Credit Cars of Joplin. Hendren stated that Stayton was responsible for making a deposit on behalf of the company for cash and checks received each day. The deposit slips were on file at the office with the correct distribution of cash and checks indicating the total deposit for the day. In her scheme, Stayton removed cash from the deposit that she was entrusted to make and replaced the loss with checks received from the mail or from walk-in payments to cover the difference, therefore matching the total that was expected to go in to the daily deposit. By doing this, Stayton was able to steal cash from the business and disguise her scheme. Hendren stated that Stayton’s scheme became more haphazard as she would sometimes not make a deposit to the bank at all, leaving several checks written to the business to go undeposited. The total loss to Credit Cars of Joplin due to Stayton’s embezzlement is $13,079.34.
Investigation revealed that Stayton was responsible for a loss of $88,230.06 to Fletcher Auto Group and $13,079.34 to Credit Cars of Joplin, for a total loss of 101,309.40, between September 2009 and December 2011. Stayton’s fraudulent scheme involved at least 131 transactions of wire fraud and 44 transactions of the stealing of cash and forging of documents.
Of the 175 transactions, the following 10 violations of fraud illustrate Stayton’s intentional fraudulent activity throughout her employment with the companies.
Judge Rush ordered a presentence investigation. No date has been scheduled for the sentencing.
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