Thursday, February 25, 2016
Former Christian County sheriff sentenced for stealing, money laundering
The former sheriff of Christian County, Mo., was sentenced in federal court today for embezzling county funds and for his role in laundering the proceeds of a political supporter’s investment fraud scheme.
Joseph “Joey” Edward Kyle, 54, of Ozark, Mo., was sentenced by U.S. District Judge Beth Phillips to one year and one day in federal prison. The court also ordered Kyle to pay $50,290 in restitution to Christian County and forfeit to the government a money judgment of $71,640, representing the proceeds he received from his criminal conduct. Kyle must disclose and surrender any and all property that was purchased with county funds, including firearms, ammunition, vehicles, equipment, preserved food (meals-ready-to-eat) and other supplies.
On May 20, 2015, Kyle pleaded guilty to one count of embezzling from Christian County and one count of participating in a money-laundering conspiracy. As required under the terms of his plea agreement, Kyle resigned his office as sheriff of Christian County, to which he was elected in 2008 and reelected in 2012.
Christian County Embezzlement
Kyle admitted that he embezzled $50,290 from Christian County. Kyle submitted 22 fraudulent invoices and purchase orders to the county for goods and services that were never provided between Jan. 1, 2011, and Oct. 14, 2014.
Kyle submitted those requisitions on behalf of EDI Plus, LLC, in Nixa, Mo. EDI was awarded a contract by the county to provide equipment – including firearms and ammunition – for the sheriff’s department from 2011 to 2014. Kyle received cash from EDI for his personal use then submitted fraudulent requisitions for goods and services purportedly supplied by EDI. In reality, no goods or services were provided; instead, these requisitions repaid EDI for the money Kyle personally received.
Pretrial Diversion Agreement: Stephen R. Eidson
Stephen R. Eidson, the owner of EDI, has not been charged in relation to Kyle’s theft of public funds but has entered into a pretrial diversion agreement with the U.S. Attorney’s Office.
Eidson acknowledged his role aiding and abetting Kyle in the fraud scheme in which Christian County taxpayers repaid EDI for the personal funds that he had provided to Kyle. In return, Eidson obtained the continued business of the Christian County Sheriff’s Department.
Under the terms of the pretrial diversion agreement, Eidson must surrender his federal firearms license no later than June 30, 2016. He may not become a federal firearms licensee at any point in the future and may not reapply for licensure. Eidson also must publicly apologize for the theft of public funds and complete 100 hours of community service within Christian County.
Prosecution shall be deferred for one year, provided Eidson abides by the conditions and the requirements of the pretrial diversion agreement. If Eidson violates the conditions of the agreement, the U.S. Attorney may initiate prosecution for the theft of public funds.
Money Laundering Conspiracy
Kyle also admitted that he received $21,350 from another person, identified as “Subject #2” in court documents, for his role in promoting an investment fraud scheme.
According to the plea agreement, Subject #2 owned and operated various companies and, from January 2008 to October 2014, engaged in an investment fraud scheme. Subject #2 solicited Kyle to assist him as a promoter of the scheme, to take advantage of the authority and prestige of Kyle’s position as county sheriff. Kyle referred potential investors, distributed promotional materials, served as a personal reference and recommended that victims invest money in Subject #2’s companies.
In order to persuade potential investors, Subject #2 falsely informed them that Kyle had personally invested funds and that Kyle had assembled an investment group, comprised of deputy sheriffs and others, to invest in Subject #2’s companies. In reality, Kyle did not invest his personal funds in Subject #2’s companies. Instead, Subject #2 gave Kyle 50,000 shares in one of his companies, which Subject #2 normally sold to investors at the rate of one dollar per share.
Kyle founded Five Rivers Management, LLC, purportedly as a law enforcement training company in 2011. He deposited the money he received from Subject #2 into the company’s bank account in order to conceal the source and nature of the payments, and to make them appear to be receipts from Kyle’s law enforcement training company. Subject #2 also made a $3,000 contribution, using victim investor funds, to Kyle’s political campaign on July 1, 2012.
Between June 2012 and January 2014, Subject #2 received investment funds totaling approximately $952,670. At the time he promoted the investment fraud scheme, Kyle states that he believed Subject #2’s companies were legitimately engaged in efforts to bring their products to market. However, Kyle admitted the United States could prove that he knew checks written to Five Rivers were the proceeds of some form of unlawful activity. Further, Kyle acknowledged that, at the very least, he deliberately closed his eyes to the fraud, which should have been obvious to him.
This case was prosecuted by Assistant U.S. Attorneys James J. Kelleher and Steven M. Mohlhenrich. It was investigated by the FBI, IRS-Criminal Investigation and the Missouri State Highway Patrol.