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

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.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.