By Rick Howlett
A federal grand jury in Louisville has returned a 20 count indictment against former McMahan Fire Chief Paul Barth, charging him with mail fraud, wire fraud and money laundering.
The indictment alleges that Barth embezzled and laundered about $218,000 intended for the WHAS Crusade for Children, of which Barth was board chairman, and about $97,000 from the McMahan Fire Protection District during the course of several years.
The 53 year old Barth resigned from the department in January. He was suspended the previous November while the fire district board investigated allegations that he used department funds to pay personal expenses. He was later removed as Crusade board chairman.
No court date has been set. The charges carry a maximum penalty of 150 years in prison and a $4 million fine. Barth’s attorney has said his client did nothing inappropriate.
Crusade for Children Executive Director Dawn Lee released a statement in response to the indictment:
“The WHAS Crusade for Children was disappointed to learn of the alleged actions of Mr. Barth. We are concerned about the negative impact that such actions have had on the Crusade.
We want to assure our donors that we make every effort to safeguard all contributions that we receive. Since 2002, the Crusade has had specific written procedures to facilitate easy and secure delivery of donations to the Crusade bank account.
The account that held the funds in question in this matter was not set up under those procedures and was established without the knowledge of the Crusade. In short, the funds in question were never in the possession or control of the Crusade for Children.
As a result of what we have learned from the Barth case, we have examined and strengthened our procedures with our partner agencies to ensure that all donations reach the Crusade and the children of Kentuckiana. Over the past 57 years, those donations have helped change the lives of more than three million special needs children.”
The charges are outlined in this release from the U.S. Attorney:
LOUISVILLE, KY – A federal grand jury in Louisville returned an indictment against Paul Barth, age 53, of Louisville, Kentucky, for one count of mail fraud, three counts of wire fraud, and sixteen counts of money laundering, United States Attorney Candace G. Hill of the Western District of Kentucky announced today.
Count 1 of the Indictment alleges that between January 2001 through November 2009, Barth, while employed as the Chief of the McMahan Fire Protection District (MFPD), devised a scheme or artifice to defraud the public, the MFPD, and the WHAS Crusade for Children (Crusade) by means of false or fraudulent pretenses. It further alleges that in 1998 Barth opened a business savings account at National City Bank for the “Crusade for Children c/o McMahan Fire District,” account #339221259 (MFPD Crusade Account). Barth was the only authorized signature on the account. Neither the MFPD or the Crusade authorized Barth to open the account.
As part of his scheme to defraud, Barth falsely represented to the public that donations made to MFPD would be contributed to the Crusade. Throughout the year, he and the MFPD solicited on behalf of the Crusade donations from individuals and businesses. On many occasions, individuals and businesses made Crusade donations through the mail to Barth and the MFPD that were deposited in the MFPD Crusade account.
As further part of his scheme to defraud, from 2004 through 2009, Barth caused approximately $218,995.70 to be deposited into the MFPD Crusade Account. The deposits included, among others, checks mailed to the MFPD and Barth that were intended as Crusade donations. From 2004 through 2009, however, Barth fraudulently withdrew approximately $104,371.09 in cash from the MFPD Crusade Account. From 2005 through 2009, Barth fraudulently transferred approximately $51,670 to the MFPD General Operating Fund. As charged in Counts 2, 3, and 4, Barth was causing the MFPD to overpay his salary and to pay his personal expenses through his use of the MFPD credit card. Barth also fraudulently used the MFPD Crusade account to pay personal expenses, including, among others, the following:
A. A $250 payment to the Meredith Dunn School on September 25, 2007;
B. A $300 payment to Hikes Point Optimist on March 25, 2008; and
C. Four payments to the Miller Print Group from 2005 through 2009 totaling $6,462.54.
The Indictment also alleges that Barth fraudulently caused the MFPD Crusade account to pay approximately $25,783.35 in MFPD credit card bills. As charged in Counts 2, 3, and 4, Barth was causing the MFPD to overpay his salary and to pay his personal expenses through his use of the MFPD credit card.
Count 2 of the Indictment alleges that from July 2002 through March 2009, Barth devised a scheme to obtain money by false representations from the McMahan Fire Protection District. During the course of the scheme Barth caused the MFPD to issue to him 13 additional paychecks totaling $40,638.39
Count 3 of the Indictment alleges that between June 2008 through November 2009, Barth devised a second scheme to obtain money from the MFPD by making false representations. During the course of the scheme, Barth caused the MFPD to fraudulently pay him $17,678.55 in extra salary to which he was not entitled by falsely representing that he was entitled to a salary supplement because he was not receiving regular employee benefits.
Count 4 of the Indictment alleges that between November 2007 through June 2009, Barth devised a third scheme to obtain money by false representations from the MFPD. During the course of this scheme, Barth fraudulently used a MFPD credit card under his control to make personal purchases totaling approximately $39,847.76. Those purchases included on April 14, 2009, Barth using the MFPD credit card to pay $10,886.68 in vehicle property taxes to the Jefferson County Clerk, which caused an interstate wire communication between Louisville, Kentucky, and Addison, Texas.
Count 5 charges that Barth laundered and concealed the proceeds of the money that he embezzled as described above and in Counts 1 through 4 of the Indictment. Counts 6 through 16 also charge that Barth laundered these proceeds and identifies 11 specific transactions over $10,000, including the following:
CT. DATE MONETARY TRANSACTION
6 5/19/2005 $10,536 deposit into MFPD Crusade account, National City Bank account #339221259
7 6/30/2005 $12,0179.91 deposit into MFPD Crusade account, National City Bank account #339221259
8 5/30/2006 $11,931 deposit into MFPD Crusade account, National City Bank account #339221259
9 5/23/2007 $14,978 deposit into MFPD Crusade account, National City Bank account #339221259
10 5/24/2007 $12,298 deposit into MFPD Crusade account, National City Bank account #339221259
11 5/30/2008 $29,375 deposit into MFPD crusade account, National City Bank account #339221259
12 6/2/2009 $28,835 deposit into MFPD crusade account, National City Bank account #339221259
13 6/2/2009 $25,000 withdrawal from MFPD crusade account, National City Bank account #339221259
14 6/13/2006 $15,612 withdrawal from MFPD crusade account, National City Bank account #339221259
15 6/6/2008 $14,000 deposit into Old National Bank, account #113847980, from MFPD Crusade account, National City Bank account #339221259
16 6/4/2007 $16,000 deposit into Old National Bank, account #113847980, from MFPD Crusade account, National City Bank account #339221259
The maximum combined potential penalties for all counts are 150 years’ imprisonment, a $4,000,000 fine, and period of supervised release of 3 years.
The case is being prosecuted by Assistant United States Attorney Bryan Calhoun. It was investigated by the United States Secret Service – Kentucky Electronic Crimes Task Force, which includes the University of Louisville Police Department, the United States Postal Inspection Service, and the Criminal Investigation Division of the Internal Revenue Service.
Paul R. Johnson, Special Agent in Charge of the United States Secret Service, Louisville Field Office stated, “this case is a great example of the type of cooperation that occurs when local, state and federal investigators come together and work toward a common goal of investigating electronic and financial crimes investigations. It is through this partnership we have the ability to have such successful conclusions to our investigations, regardless of the investigative target. There is no financial crime too small or too large for our Electronic Crimes Task Force to bring to justice.”
Christopher Pikelis, Special Agent in Charge, IRS Criminal Investigation-Nashville Field Office stated “IRS Criminal Investigation Special Agents are uniquely qualified to follow the money trail; and we do. We use our expertise to conduct complex financial investigations to unravel violations of federal law involving those that operate in a variety of industries including those that abuse public trust positions.”
It is anticipated that Barth will voluntarily appear on the arrest warrant before the United States Magistrate Judge, at a time to be determined.
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The indictment of a person by a Grand Jury is an accusation only and that person is presumed innocent until and unless proven guilty.