(BizSense file photo)
One of the co-conspirators at the center of an accounting fraud that two years ago toppled Richmond-based MGT Construction has pleaded guilty to federal criminal charges related to the scheme.
Patrick Lindsey, who handled the books at the now-bankrupt general contracting arm of local real estate giant Thalhimer, entered into a plea agreement on Monday afternoon in federal court in Richmond with one felony count of conspiracy to commit wire fraud and bank fraud.
The 42-year-old now faces a maximum of five years in prison, a maximum fine of $250,000 and three years of supervised release, although the government is recommending a sentence below the maximum in part because of Lindsey’s cooperation with authorities.
He’s set to be sentenced on July 20. He remains free on a personal recognizance bond in the interim.
Lindsey appeared at the hearing with his attorney Ted Bruns of Richmond firm Blackburn Conte Schilling & Click.
Also in attendance were federal investigators, as well as Thalhimer executives.
Lindsey was charged Feb. 18 via a so-called criminal information charge, which does not require a grand jury indictment. He was not arrested as part of the charge.
Lindsey started working at MGT in 2007 as an estimator. He had moved up to a vice president role by the time he was terminated in November 2016, when Thalhimer said it internally discovered the accounting problems.
Click here for the statement of facts.
A statement of facts included in the case states that he was integral to the orchestration of a five-year scheme that manipulated MGT’s books by moving expenses from one construction project to another in order to make completed jobs appear more profitable. That resulted in boosted bonuses for Lindsey and others, while concealing the company’s true, tenuous financial state.
“During the course of the conspiracy, Lindsey moved (or deleted) thousands of invoices, concealing the fact that – by the end of the conspiracy – MGT Construction was at least $28 million in debt,” it continued.
While his plea of conspiracy to commit the offenses implies that he didn’t act alone, the government’s case against Lindsey did not explicitly name any of his alleged co-conspirators.
The statement of facts states only that from 2011 through 2016, Lindsey conspired with “others known and unknown” and that he acted at “the direction of his co-conspirators.”
Lindsey’s boss at MGT was the company’s former longtime president Mike Logan Sr. Logan has not been charged in any way and previously denied his involvement in the scheme.
To keep the scheme going, Lindsey and his alleged co-conspirators had to continuously start new construction jobs to allow the manipulated numbers to keep making sense.
“This necessity for continued accounting manipulation meant that MGT operated under the perverse incentive of acquiring new projects at any cost – even if that required MGT to submit deliberately under-valued project estimates in order to ensure that MGT would under bid other construction firms when competing for new projects,” the government wrote in the statement of facts.
The wire and bank fraud conspiracy charges are a result of Lindsey and others submitting false documents that were used to obtain loans for MGT from various banks such SunTrust, BB&T, PNC and Fulton Bank, as well as to insurance companies for bonds on construction projects.
Lindsey, as part of his agreement with the government, will forfeit $227,000, a sum that represents the proceeds he obtained as a result of the scheme.
(BizSense file photo)
One of the co-conspirators at the center of an accounting fraud that two years ago toppled Richmond-based MGT Construction has pleaded guilty to federal criminal charges related to the scheme.
Patrick Lindsey, who handled the books at the now-bankrupt general contracting arm of local real estate giant Thalhimer, entered into a plea agreement on Monday afternoon in federal court in Richmond with one felony count of conspiracy to commit wire fraud and bank fraud.
The 42-year-old now faces a maximum of five years in prison, a maximum fine of $250,000 and three years of supervised release, although the government is recommending a sentence below the maximum in part because of Lindsey’s cooperation with authorities.
He’s set to be sentenced on July 20. He remains free on a personal recognizance bond in the interim.
Lindsey appeared at the hearing with his attorney Ted Bruns of Richmond firm Blackburn Conte Schilling & Click.
Also in attendance were federal investigators, as well as Thalhimer executives.
Lindsey was charged Feb. 18 via a so-called criminal information charge, which does not require a grand jury indictment. He was not arrested as part of the charge.
Lindsey started working at MGT in 2007 as an estimator. He had moved up to a vice president role by the time he was terminated in November 2016, when Thalhimer said it internally discovered the accounting problems.
Click here for the statement of facts.
A statement of facts included in the case states that he was integral to the orchestration of a five-year scheme that manipulated MGT’s books by moving expenses from one construction project to another in order to make completed jobs appear more profitable. That resulted in boosted bonuses for Lindsey and others, while concealing the company’s true, tenuous financial state.
“During the course of the conspiracy, Lindsey moved (or deleted) thousands of invoices, concealing the fact that – by the end of the conspiracy – MGT Construction was at least $28 million in debt,” it continued.
While his plea of conspiracy to commit the offenses implies that he didn’t act alone, the government’s case against Lindsey did not explicitly name any of his alleged co-conspirators.
The statement of facts states only that from 2011 through 2016, Lindsey conspired with “others known and unknown” and that he acted at “the direction of his co-conspirators.”
Lindsey’s boss at MGT was the company’s former longtime president Mike Logan Sr. Logan has not been charged in any way and previously denied his involvement in the scheme.
To keep the scheme going, Lindsey and his alleged co-conspirators had to continuously start new construction jobs to allow the manipulated numbers to keep making sense.
“This necessity for continued accounting manipulation meant that MGT operated under the perverse incentive of acquiring new projects at any cost – even if that required MGT to submit deliberately under-valued project estimates in order to ensure that MGT would under bid other construction firms when competing for new projects,” the government wrote in the statement of facts.
The wire and bank fraud conspiracy charges are a result of Lindsey and others submitting false documents that were used to obtain loans for MGT from various banks such SunTrust, BB&T, PNC and Fulton Bank, as well as to insurance companies for bonds on construction projects.
Lindsey, as part of his agreement with the government, will forfeit $227,000, a sum that represents the proceeds he obtained as a result of the scheme.