Former U of L Executive Pleads Guilty to $2.8 Million Embezzlement and Tax Fraud

Perry Chadwick Vaughn, a former executive director of the Department of Family and Geriatric Medicine at the University of Louisville School of Medicine, pleaded guilty to embezzlement and tax fraud to the tune of $2.8 million. 36 year old Vaughn pleaded guilty in a US District Court to a seven count federal indictment. This includes theft, money laundering, bribery, mail fraud, and filing fraudulent federal income tax returns.

The $2.8 million theft

According to a press release by Acting US Attorney John E. Kuhn Jr., Vaughn has admitted that between January 2007 and August 2013, he defrauded the Department of Family and Geriatric Medicine by creating false bank reconciliations and bank statements. He diverted contractual checks and payments to an account of the University Family and Geriatric Medicine Associates and then withdrew $2.8 million for his personal use.

Tax attorneys say that a plea bargain will fetch Vaughn a 64 month prison term in addition to paying $2,801,201 in restitution provided that Senior US District Judge Charles R. Simpson orders the recommended sentence in such cases. Sentencing has been set for March 12th.

Pleads guilty on seven counts

Vaughn is said to be one among at least six university employees to be accused of stealing money from the school or grant funds over a period of five years starting in 2009. According to reports, the accused showed no emotion as he pleaded guilty to the seven counts. One of the counts included one in 2012 where he omitted $776,000 in income that he stole. Investigations into the case have been carried out by the US Postal Inspection Service, US Secret Service, University of Louisville Police, and the IRS.

Money used for personal benefits

Following the allegations, Vaughn’s services were terminated by the university. He pleaded guilty to money laundering by forging bank statements and reconciliations that allowed him to hide payments made to his own bank accounts. Reports indicate that Vaughn used the funds to purchase or lease luxury vehicles that included a Range Rover, buy real estate and embark on luxury vacations.

A grand jury found Vaughn guilty of making misrepresentations to the University of Louisville Audit Services. They also charged him with diverting money from the department to the practice groups and them withdrawing the funds for himself. Earlier this year, an independent auditor had recommended several changes to help the university improve control over their finances. Several of these have already been implement, which includes the appointment of a chief financial officer.

The IRS has a long way to go before trust is earned back

In other tax related news, the embattled IRS Commissioner John Koskinen said during a press conference that there is likely to be a delay in tax refunds due to budget cuts at the Internal Revenue Service. Tax attorneys say this is likely to hinder several services and lead to slower auditing due to fewer over paid agents. Other tax lawyers believe this is just fine considering that the IRS has shown to be corrupt and has credibility issues with the American public over those lost emails pertaining to Lois Lerner and many other reasons.

Although returns will become processed, tax refunds are likely to take much longer than the usual three weeks that tax payers are used to. Budget cuts have put a stop to hiring by the IRS. The agency’s budget was cut by $346 million for the fiscal year ending September 2015 because America is broke and the money that it has is spent on keeping troops in Europe, Obamacare, paying so many existing federal employees, and all those retired federal employees as well.

The IRS and Vaughn both have credibility issues.