Jerry Holmes and R. Scott Pace face the Consequences of their Unethical and Illegal Actions. Prison, Probation and Restitution…

Every choice has a consequence.  What started out as a legitimate business turned into an opportunity to meet a need that coupled with individual rationalization became the fertilizer for fraud.  As a business ethics and fraud prevention speaker, I see this frequently…intelligent and well meaning businessmen (or women) meeting a perceived need illegally and likely rationalizing that “they’ll pay it back” thus justifying their soon to be discovered illegal actions and then being forced to face the very real consequences of them.

Here’s the US Attorney’s news release…

DEPARTMENT OF JUSTICE

United States Attorney’s Office
Western District of North Carolina

FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 8, 2011

CONTACT: Lia Bantavani
704.338.3140
FAX NUMBER: 704.227.0264

OWNERS OF SETTLEMENT COMPANY SENTENCED TO 33 MONTHS IN PRISON FOR EMBEZZLEMENT AND TAX EVASION CHARLOTTE, N.C. – The United States Attorney’s Office for the Western District of North Carolina announced that the owners of the Settlement Source, LLC, were each sentenced to prison terms for their role in embezzling money from the escrow account at the Settlement Source and for tax evasion.

U.S. District Judge Max O. Cogburn, Jr. sentenced Settlement Source owner and former chief executive, Jerry Holmes, 64, of Matthews, N.C., to serve 33 months in federal prison, to be followed by two years of supervised release. The defendant was also ordered to pay restitution in the amount of $1.9 million. Judge Cogburn also sentenced Settlement Source owner R. Scott Pace, 38, of Charlotte, to 33 months in federal prison, two years of supervised release, and ordered to pay restitution in the amount of $1.9 million.

The United States Attorney’s Office is joined in making today’s announcement by Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service (IRS) – Criminal Investigation Division (CID). Holmes and Pace pled guilty to the charges in a criminal bill of information filed on May 19, 2010. According to the bill of information, in or about November 2005 Holmes and Pace discovered that they could embezzle client funds from the escrow account – at least initially – without any customer discovering the embezzlement and without any noticeable effect on operations. Over time, Holmes and Pace, assisted by another defendant not yet sentenced, embezzled substantial amounts of money for, among other things, real estate investments, a box suite for Carolina Panthers football games, personal loans, and a loan for Holmes’ daughter and son-in-law to purchase a house. When the scheme collapsed in or about July 2008, it caused losses to clients and insurers of approximately $2.4 million.

In pronouncing the sentences, Judge Cogburn stressed that the sentences were only as low as they were because the defendants self-reported the fraud, believing it was unknown to the government. Holmes and Pace will be allowed to self report to begin service of their prison terms once the Federal Bureau of Prisons has designated the facilities at which they will serve their respective sentences. All federal prison sentences are served without the possibility of parole.

The investigation was led by the FBI and IRS-CID. The prosecution for the government was handled by Assistant U.S. Attorney Kurt W. Meyers of the U.S. Attorney’s Office in Charlotte.

If you have information that might be helpful in this case in identifying the motives behind the actions taken by Holmes or Pace…please share.

YOUR COMMENTS ARE WELCOME!

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2 Responses to Jerry Holmes and R. Scott Pace face the Consequences of their Unethical and Illegal Actions. Prison, Probation and Restitution…

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    Jerry Holmes and R. Scott Pace face the Consequences of their Unethical and Illegal Actions. Prison, Probation and Restitution… « Motivational Speaker – Chuck Gallagher Business Ethics and Choices Expert…

  2. Gwenna Pinney says:

    As a person who was employed by this company when this happened, I can tell you that what Jerry and Scott started was nothing short of awesome!! Our company operated a very successful business that was thriving even through difficult economic windfalls. I will say that I thoroughly loved my job and was determined to hold my position until retirement. The company had a firm foundation, a solid managing team, great support from the underwriting title company, and a highly capable sales team. I was proud to be a part of the organization and miss it greatly. I was very dismayed and quite shocked to hear what was going on behind the scenes. I have never been more saddened and utterly disappointed in the greed of the 3 men involved. What they had built for us was wonderful and we were stripped of it all without notice. I greatly miss the title industry and hope to return to it. Perhaps I will venture out and open my own company at some point. They certainly offered me an opportunity when I joined their team that was fulfilling for me and many others. Shame on them for bringing us all down. They completely devastated me as a single working mother of 3 who felt secure enough in my position to purchase a new truck and a house while employed there. Needless to say, I lost them both and was forced into Ch. 7 with half the rest of the country. But it shouldn’t have happened to me. I had a great job with a great company. What a shock to find out that it was all over in the blink of an eye. I’m glad they are being forced to pay back the money that our devoted customers lost. I can’t imagine being a customer who was left literally homeless in some of these final transactions. Tragic.

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