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September 26, 2023

Accountants Behaving Badly: Defrauding Clients, CPA Ponzi Scheme, Wire Fraud Is a No-No

Plus, accountant jailed for lavish lifestyle fraud, and life in prison and hard labor isn’t a horrible enough sentence for one Zambian accountant.

New Mexico CPA suspected of defrauding couple out of $1 million [Las Cruces Sun News]
Thomas Laws was arrested on Aug. 26 for allegedly defrauding two clients of more than $1 million entrusted to him.

Thomas Laws

He was charged with wire fraud; transportation, transmission, and transfer of stolen money; fraud; and aggravated identity theft.

Laws, 61, failed to invest the money delegated to him by two clients, who were married. Instead of using the clients’ money as directed, he’s suspected of using it to pay credit card debts, obligations to other clients and investors, and other personal and business expenditures.

Long Beach accountant gets eight years in prison for running Ponzi scheme [Long Beach Post]
Carol Ann Pedersen, a tax preparer in Long Beach, CA, was sentenced on Sept. 4 to eight years and one month in federal prison for embezzling more than $27 million over the span of two decades from clients who believed she was investing their funds in low-risk securities.

She was ordered to pay restitution of about $27.5 million to victims and serve three years under supervised release following her prison stint. Pedersen was ordered to self-surrender on Oct. 16 to begin serving her sentence.

Pedersen’s scheme involved dozens of victims and operated from 1996 to 2017. A CPA but not a licensed broker or investment advisor, Pedersen, 65, used some of the victims’ money to make distribution payments to others in order to keep the Ponzi scheme running. She also used the victims’ funds to pay her credit card bills, establish trust accounts for family members, and to purchase real estate.

You can also read the press release from the U.S. Attorney’s Office for the Central District of California here.

Newton man pleads guilty to wire fraud, filing false tax return [Patch]
Here’s an update to a story we included in Accountants Behaving Badly on Aug. 12:

A Newton accountant admitted to stealing $1.6 million from an elderly client and a former client’s estate and pleaded guilty Thursday [Sept. 5] in federal court in Boston to charges of wire fraud and filing a false tax return.

Jeffrey Kellem, 49, pleaded guilty to four counts of wire fraud and one count of filing a false tax return. Kellem was charged by Information in August 2019. His sentencing is scheduled for Dec. 5.

Jeffrey Kellem

From December 2016 through February 2018, Kellem, 49, used his position as an accountant for an elderly client and the estate of a deceased client to steal more than approximately $1.6 million for his own use. Kellem allegedly transferred his clients’ funds, without their authorization, to bank accounts he opened and controlled.

Kellem also failed to report more than $500,000 in income from the funds he took on his tax returns. As a result, in 2017, Kellem avoided paying taxes totaling more than $150,000.

Judge slams ‘audacity’ of accountant who stole £10ok to afford luxury lifestyle [Evening Standard]
Henry Sathiyabalan was sentenced to three years in prison after the accountant stole £103,000 over three years from an architect firm and used the money for luxury vacations, chauffeur-driven cars, and hotel stays at The Shard in London.

Henry Sathiyabalan

Sathiyabalan, 34, paid for his extravagant lifestyle with his company credit card while finance director for Watkins Grey International.

He denied fraud, insisting he had been entitled to spend the money and was a hardworking member of staff, but was convicted of two counts of fraud by abuse of position between April 2014 and July 2017.

Lusaka accountant gets life for sodomising brother’s son [Diggers Media]
This is pretty horrible.

High Court judge Elita Mwikisa has sentenced an accountant of Lusaka West to life imprisonment with hard labour for sodomising his five year-old nephew.

Judge Mwikisa wondered how an uncle could defile his young brother’s son, noting that the child had suffered traumatic pain that one cannot even comprehend.

This is the matter in which Victor Mulungwe of Betty Farm was charged with unnatural offence.

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