Local couple pleads guilty, avoids stimulus trial

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.

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.

In a twist, just days before they were set to face trial in Richmond federal court, a local husband-and-wife team of entrepreneurs has pleaded guilty in a case that questioned whether they abused a recession-era stimulus program.

Morris and Chiroya Cephas entered guilty pleas on Feb. 24 of one count each of submitting false documents in violation of federal law. They had been set to face trial a week later on March 1 for an alleged four-year scheme that federal prosecutors claimed bilked the government out of more than $300,000 in American Recovery and Reinvestment Act funds.

Their initial charges, brought in a grand jury indictment in October, included 28 counts and carried a combined potential maximum penalty of decades in prison, according to federal guidelines.

In entering a plea deal, the government agreed to drop all but one of the counts and lower the amount of the loss suffered by the government. The deal also calls for a maximum term of five years in prison, along with fines, restitution and three years of supervised release. If sent to prison, the couple agrees to voluntarily participate in the Bureau of Prisons’ Inmate Financial Responsibility Program.

They now await sentencing, which is scheduled for May 31.

The case stems the Cephases’ participation in the Recovery Act program through their company, Cephas Industries, a now-defunct Southside demolition waste recycling operation.

They received about $500,000 in stimulus funds, which were to be used to build a highly touted $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.

The charges claimed the Cephases instead used much of the money for their own personal means, including paying their rent and other debts.

The charge of submitting false documents relates to their lying about the unauthorized sale of equipment that was purchased with stimulus money and the use of the proceeds of the sales for their own personal uses.

The original indictment pegged the alleged loss to the Recovery Act program at $340,477. The plea agreement states that the actual loss on the single count was between $10,000 and $30,000.

As part of their deal, the Cephases agreed to pay restitution of $108,500 to the U.S. Department of Energy, which administered the stimulus funds. They also must pay $12,787 in restitution to Golder Associates, a subcontractor they worked with related to the stimulus project.

Attorneys for the Cephases, who had pleaded not guilty throughout the process until the plea deal, had already chipped away at the initial charges in the months leading up to trial, whittling them down to eight counts.

Morris Cephas, 53, is represented in the case by Williams Mullen attorney John Davis, who declined to comment on the guilty plea.

Chiroya Cephas, 46, is represented in the case by Rob Wagner from the federal public defender’s office and Braxton Hill of Christian Barton. Neither Wagner nor Hill would comment.

Assistant U.S. Attorneys David Harbach and David Schiller worked the case for the U.S. Attorney’s Office, which did not respond to a request for comment.

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.

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.

In a twist, just days before they were set to face trial in Richmond federal court, a local husband-and-wife team of entrepreneurs has pleaded guilty in a case that questioned whether they abused a recession-era stimulus program.

Morris and Chiroya Cephas entered guilty pleas on Feb. 24 of one count each of submitting false documents in violation of federal law. They had been set to face trial a week later on March 1 for an alleged four-year scheme that federal prosecutors claimed bilked the government out of more than $300,000 in American Recovery and Reinvestment Act funds.

Their initial charges, brought in a grand jury indictment in October, included 28 counts and carried a combined potential maximum penalty of decades in prison, according to federal guidelines.

In entering a plea deal, the government agreed to drop all but one of the counts and lower the amount of the loss suffered by the government. The deal also calls for a maximum term of five years in prison, along with fines, restitution and three years of supervised release. If sent to prison, the couple agrees to voluntarily participate in the Bureau of Prisons’ Inmate Financial Responsibility Program.

They now await sentencing, which is scheduled for May 31.

The case stems the Cephases’ participation in the Recovery Act program through their company, Cephas Industries, a now-defunct Southside demolition waste recycling operation.

They received about $500,000 in stimulus funds, which were to be used to build a highly touted $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.

The charges claimed the Cephases instead used much of the money for their own personal means, including paying their rent and other debts.

The charge of submitting false documents relates to their lying about the unauthorized sale of equipment that was purchased with stimulus money and the use of the proceeds of the sales for their own personal uses.

The original indictment pegged the alleged loss to the Recovery Act program at $340,477. The plea agreement states that the actual loss on the single count was between $10,000 and $30,000.

As part of their deal, the Cephases agreed to pay restitution of $108,500 to the U.S. Department of Energy, which administered the stimulus funds. They also must pay $12,787 in restitution to Golder Associates, a subcontractor they worked with related to the stimulus project.

Attorneys for the Cephases, who had pleaded not guilty throughout the process until the plea deal, had already chipped away at the initial charges in the months leading up to trial, whittling them down to eight counts.

Morris Cephas, 53, is represented in the case by Williams Mullen attorney John Davis, who declined to comment on the guilty plea.

Chiroya Cephas, 46, is represented in the case by Rob Wagner from the federal public defender’s office and Braxton Hill of Christian Barton. Neither Wagner nor Hill would comment.

Assistant U.S. Attorneys David Harbach and David Schiller worked the case for the U.S. Attorney’s Office, which did not respond to a request for comment.

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