The new Cephas facility was meant to be built on 5 acres at 3413 Formex Road. The property had been owned by the company, but was sold in foreclosure in February.
Facing criminal charges for allegedly milking a recession-era stimulus program, a pair of local entrepreneurs scored a minor victory against federal prosecutors as their case heads to trial in less than a month.
Defense attorneys for Morris Cephas Sr., Chiroya Cephas and their defunct Southside recycling company, Cephas Industries, successfully fought to knock off 19 of the initial 28 counts they were charged with through federal indictment in October.
As a result, the husband-and-wife couple was re-indicted Feb. 2 on just nine counts. The new indictment, labeled as a superseding indictment, now includes just one count of theft of government property, as opposed to 19 such allegations in the initial charge.
It’s a small, technical victory for the Cephases, who have pleaded not guilty and plan to make their case in a trial beginning next month in the Richmond federal courthouse.
They also still face one count of conspiracy, one count of false and fraudulent claims, four counts of false statements and documents and two counts of fraudulent monetary transactions.
The grand jury indictment claims that the Cephases engaged in a scheme over a four-year period beginning in 2010 to defraud the U.S. Department of Energy and the Virginia Department of Mines, Minerals and Energy, which dispersed to their company around $500,000 from the American Recovery and Reinvestment Act. The intention of the grants was to stimulate the economy by providing incentives to diversify the state’s energy supply.
Read the new indictment (PDF)
The charges claim the Cephases instead used much of the money for their own personal means, including paying their taxes – rather than the money’s intended purpose of helping build a recycling facility and creating jobs on the Southside.
Press releases from the time touted the planned Cephas facility as a $3.5 million biomass recycling complex to be built in a 33,000-square-foot space on Formex Road. It was expected to create 50-75 jobs and be operational by spring 2011.
Cephas Industries, according to the government, was found to be out of business by May 2013.
The indictment pegs the alleged loss to the Recovery Act program at $340,477.
The new indictment is the result of the Cephases legal team questioning the theft of government property claims, arguing that the bulk of them were duplicative.
Their arguments forced federal prosecutors to back off of some of their initial allegations, and the fewer counts could help reduce the potential overall sentence, if they are found guilty. The initial 28 counts carried a combined potential maximum penalty of decades in prison, according to federal guidelines.
Chiroya Cephas and Cephas Industries are represented by Williams Mullen attorney John Davis. Davis declined to comment on the case.
Morris Cephas is represented by attorney Braxton Hill from Christian & Barton, who did not return a call by press time.
The attorneys filed another argument this week challenging one of the fraudulent monetary transaction claims. If they’re again successful, the Cephases would be down to eight counts.
U.S. Attorney’s Office spokeswoman Laura Taylor said the government filed the superseding indictment “in an effort to respond and streamline the indictment.”
Because of the new indictment, the Cephases must be re-arraigned at a hearing on Feb. 17, where they’re again expected to plead not guilty.
They were not arrested as a result of the charges and have remained free throughout the process.
Their case is set for a two-day trial beginning March 1.
The new Cephas facility was meant to be built on 5 acres at 3413 Formex Road. The property had been owned by the company, but was sold in foreclosure in February.
Facing criminal charges for allegedly milking a recession-era stimulus program, a pair of local entrepreneurs scored a minor victory against federal prosecutors as their case heads to trial in less than a month.
Defense attorneys for Morris Cephas Sr., Chiroya Cephas and their defunct Southside recycling company, Cephas Industries, successfully fought to knock off 19 of the initial 28 counts they were charged with through federal indictment in October.
As a result, the husband-and-wife couple was re-indicted Feb. 2 on just nine counts. The new indictment, labeled as a superseding indictment, now includes just one count of theft of government property, as opposed to 19 such allegations in the initial charge.
It’s a small, technical victory for the Cephases, who have pleaded not guilty and plan to make their case in a trial beginning next month in the Richmond federal courthouse.
They also still face one count of conspiracy, one count of false and fraudulent claims, four counts of false statements and documents and two counts of fraudulent monetary transactions.
The grand jury indictment claims that the Cephases engaged in a scheme over a four-year period beginning in 2010 to defraud the U.S. Department of Energy and the Virginia Department of Mines, Minerals and Energy, which dispersed to their company around $500,000 from the American Recovery and Reinvestment Act. The intention of the grants was to stimulate the economy by providing incentives to diversify the state’s energy supply.
Read the new indictment (PDF)
The charges claim the Cephases instead used much of the money for their own personal means, including paying their taxes – rather than the money’s intended purpose of helping build a recycling facility and creating jobs on the Southside.
Press releases from the time touted the planned Cephas facility as a $3.5 million biomass recycling complex to be built in a 33,000-square-foot space on Formex Road. It was expected to create 50-75 jobs and be operational by spring 2011.
Cephas Industries, according to the government, was found to be out of business by May 2013.
The indictment pegs the alleged loss to the Recovery Act program at $340,477.
The new indictment is the result of the Cephases legal team questioning the theft of government property claims, arguing that the bulk of them were duplicative.
Their arguments forced federal prosecutors to back off of some of their initial allegations, and the fewer counts could help reduce the potential overall sentence, if they are found guilty. The initial 28 counts carried a combined potential maximum penalty of decades in prison, according to federal guidelines.
Chiroya Cephas and Cephas Industries are represented by Williams Mullen attorney John Davis. Davis declined to comment on the case.
Morris Cephas is represented by attorney Braxton Hill from Christian & Barton, who did not return a call by press time.
The attorneys filed another argument this week challenging one of the fraudulent monetary transaction claims. If they’re again successful, the Cephases would be down to eight counts.
U.S. Attorney’s Office spokeswoman Laura Taylor said the government filed the superseding indictment “in an effort to respond and streamline the indictment.”
Because of the new indictment, the Cephases must be re-arraigned at a hearing on Feb. 17, where they’re again expected to plead not guilty.
They were not arrested as a result of the charges and have remained free throughout the process.
Their case is set for a two-day trial beginning March 1.