Co-conspirator sentenced to prison for conspiracy to defraud Wachovia
Scott Welch, 48, of Mooresville, N.C., was sentenced Thursday, June 30, to 70 months in federal prison, to be followed by a supervised release term of three years, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition, U.S. District Judge Max O. Cogburn, Jr. ordered Welch to pay restitution in the amount $11,221,462 to Wachovia and $1,713,083 to the Internal Revenue Service (IRS). Welch’s co-defendant, John P. Cousar, Jr., 48, a retired Charlotte firefighter, was also sentenced today to 33 months imprisonment, to be followed by three years of supervised release. Cousar was ordered to pay restitution in the amount of $5,901,593 to Wachovia and $1,124,448 to the IRS.
The defendants were also ordered to forfeit to the government hundreds of thousands of dollars in assets, including three real properties. One forfeited asset was Welch’s lake house located in Mooresville, N.C.
U.S. Attorney Anne M. Tompkins is joined in making the announcement by Keith Fixel, Inspector in Charge of U.S. Postal Inspection Service (USPIS), Charlotte Division Headquarters, Kay B. Jernigan, Acting Special Agent in Charge of the IRS Criminal Investigation Division (IRS-CI), and Special Agent in Charge Tony Underwood of the North Carolina State Bureau of Investigation (NC SBI), Southern Piedmont District.
In June 2010, Welch and Cousar pled guilty to mail fraud conspiracy and tax violations.
According to court documents, from at least 2000 through November 2008, Welch served as the Vice President in Utility Services at the Wachovia Distribution Utility Center in Charlotte. As Vice President, Welch oversaw the payment of invoices submitted by outside vendors who provided goods and services to Wachovia. Welch used his position to lead the conspiracy by directing co-defendant Cousar and others to transmit bogus invoices totaling over $11 million through their respective businesses to Wachovia.
The invoices, which falsely reflected that actual goods and services were provided to Wachovia, were transmitted to Wachovia by the co-conspirators through the U.S. mail. Thereafter, Wachovia issued payment for the invoices totaling more than $11 million during the nearly eight-year time period of the conspiracy. Cousar submitted approximately $5,901,593 in bogus invoices during the time period of the conspiracy and made kick back payments to Welch in connection with the scheme.
In addition, according to Court documents, Welch evaded taxes on the $6.1 million in income he earned from the scheme by filing false tax returns with the IRS. Similarly, Cousar failed to file income tax returns reporting the over $5 million in income he earned from scheme.
In pronouncing the sentences, U.S. District Judge Max O. Cogburn, Jr. emphasized the substantial assistance and cooperation provided by the defendants to law enforcement authorities in connection with unraveling the eight-year scheme.
“Welch betrayed Wachovia’s trust by engaging in this eight year bogus invoice scheme to steal $11.2 million,” said U.S. Attorney Anne Tompkins. “My office will continue to aggressively investigate and prosecute corrupt bank employees and others who seek to fraudulently enrich themselves at the expense of their employers. This investigation is another great example of federal and state agencies cooperating to combat such illegal activity in our community.”
“The prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system,” stated Acting Special Agent in Charge Jernigan. “In this case, Terry Scott Welch failed to report substantial income derived from embezzled funds and John P. Cousar failed to file an income tax return, thereby evading significant income taxes. This sentence should send a clear message: Schemes to evade taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time” Jernigan added.
Co-defendants Delmar Dove, 60, of Charlotte, Jerry Little, 51, of Charlotte, and Robert Otto, 67 of Charlotte had previously entered guilty pleas for submitting bogus invoices in connection with the $11.2 million scheme to defraud Wachovia and are awaiting sentencing.
Welch and Cousar have been released on bond since entering their guilty pleas in June 2010. They will be ordered to report to a federal facility, at which time they will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.
The investigation was conducted by USPIS, IRS-CI, and NC SBI. The case is being handled for the government by Assistant U.S. Attorney Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.