A former bookkeeper has decided to plead guilty to federal charges related to the theft of $2.1 million from an Edinburgh business.
Gail Greathouse, 57, of Columbus, notified the U.S. District Court of Southern Indiana that she intends to plead guilty to six counts of wire fraud and a charge of filing a false tax return, U.S. Attorney Joe Hogsett said Thursday. The plea must be accepted by a U.S. District Court judge.
Greathouse also is the clerk-treasurer for Elizabethtown, a small town in Bartholomew County southeast of Columbus.
The investigation into the theft of money from LB Mold Inc. began more than two years ago.
Greathouse embezzled more than $2.1 million during six years from the Edinburgh industrial molding company, where she worked as an office manager and bookkeeper, according to the U.S. Attorney’s Office for the Southern District of Indiana.
She wrote checks and transferred funds from the LB Mold’s business accounts to various businesses to pay for personal expenses including her cellphone bill, her credit card bills, a relative’s college tuition and other expenses, the probable-cause affidavit said.
“The information alleges she was spending the embezzled money on purely personal things that had nothing whatsoever to do with LB Mold,” Hogsett said.
Hogsett said the multimillion-dollar theft was a significant case of white-collar fraud.
Greathouse will face up to 20 years in federal prison and a $250,000 fine on each count of wire fraud and up to three years in prison on the charge of filing a false income tax return that grossly understated her income, Hogsett said.
She did not return messages left Thursday.
LB Mold, which makes molds for automotive rims, had employed Greathouse for 13 years before dismissing her in 2010. She was not authorized to sign company checks except in cases of emergency but had been responsible for the company’s accounting, including cash flow reports, financial statements and purchasing, according to the affidavit.
Company owner John Bodine could not be reached for comment Thursday, and LB Mold’s attorney did not return a message.
Two years ago, Bodine said that the theft involved a significant amount of his company’s revenues. He said at the time that his business was not in danger of closing and that he could still pay wages and benefits to his 10 employees.
LB Mold filed a civil lawsuit against Greathouse in the hope of recovering some of the missing money.
Between 2005 and 2010, Greathouse defrauded LB Mold by making unauthorized purchases on the company’s credit cards and writing checks to herself and a Columbus area automotive repair and restoration company, Blackwolf Performance, owned by her daughter and son-in-law, according to the affidavit. Greathouse also was the chief financial officer of that business, according to court documents.
Blackwolf Performance, co-owned by David and Rhonda Thompson, dissolved Feb. 3, 2011, according to business entity records with the Indiana Secretary of State’s Office. A phone number listed for Blackwolf Performance was disconnected.
A call placed to David and Rhonda Thompson’s home number on Thursday rang but no one answered.
An investigation by the U.S. Secret Service, the Internal Revenue Service and the Indiana State Police found that she transferred nearly $1.8 million in stolen money to two of Blackwolf Performance’s bank accounts, according to the affidavit.
She withdrew another $235,000 from the LB Mold’s accounts and charged more than $83,000 in personal expenses to the company’s credit card, the affidavit said.
“It’s not unusual for long-term employees to obtain positions of trust within a company,” Hogsett said. “Had checks and balances been in place, the unauthorized expenditures she had been making could have been detected sooner.”
A hearing on the guilty plea is expected to take place in 30 to 60 days, but no date has been set yet.
“Hopefully, this criminal prosecution sends an important message,” Hogsett said. “If you choose to engage in fraud, you will be identified, there will be an investigation, and you will be prosecuted. Hopefully, there’s some deterrent value.”
The U.S. Attorney’s Office did not offer Greathouse any recommendation for a reduced sentence in exchange for the guilty plea, Hogsett said.
However, a judge could decide to shorten her sentence, since federal sentencing guidelines would give her credit for cooperating with authorities, he said.
Hogsett said his office typically recommends the highest sentence and also tries to recover stolen money by seizing assets.
He said he didn’t know how much could be returned to LB Mold in this case, because the investigation found that Greathouse spent much of the money on credit card debt, phone bills and college tuition for relatives.
“We work on behalf of victims to seize assets that were obtained through illicit or illegal means,” he said.
“But unfortunately, in many white-collar cases, when the defendants obtain unauthorized funds, they spend them, and the money’s just gone.”