Former CEO Gets 9 Years in Prison, $3.5M Fine

A federal judge has ordered a former chief executive to pay $3.5 million and serve more than nine years in prison for his part in a scheme that plunged his company into bankruptcy in 2001.

The former executive of National Environmental Services Co. (Nesco), Eddy Lynn Patterson, was convicted in December on 22 counts of conspiracy, fraud, tax evasion and making false statements on loan documents, the Associated Press reported. His September 1 sentencing called for a federal prison term of nine year and two months.

A jury found that Patterson inflated income by 400 percent in 2000 and 175 percent in the first quarter of 2001 through a scheme that involved creating bogus invoices totaling nearly $2.4 million. The jury said he altered financial records to disguise the poor financial performance of the Tulsa-based company, which built, installed and maintained gasoline fueling systems.

When the scheme was discovered, and the company filed for bankruptcy protection in late 2001, banks lost an estimated $27 million; shareholders lost about $11 million.

U.S. District Judge Claire Eagan ordered Patterson, 62, to pay $3.5 million because he received $5.5 million in personal loans from banks. The banks recovered about $2 million.

Stephen Knorr, Patterson's attorney, said payment of the fine is unlikely because his client has lost “pretty much everything he owned.”

Patterson has been jailed since his conviction out of concern that he might flee the country. A Nov. 12 hearing will determine the amount of restitution he must pay.

You may like these other stories...

Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
For bitcoin users, the taxman cometh. And you best know how to calculate taxes owed on what the IRS calls convertible virtual currency.In March 2014, the IRS issued Notice 2014-21, which declares virtual currency will be...
Majority of House of Representatives urges leadership to preserve cash method of accounting for tax purposesA bipartisan majority of the House of Representatives – 233 members – has signed a letter urging House...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.