Former Auburn University Professor Given Five Years In Prison and Over $1.3 Million in Restitution! Comments by Ethics Speaker Chuck Gallagher

February 23, 2008

Commit a fraud – make that choice – and a consequence you won’t want – will follow! That’s exactly what happened to a former Auburn University Professor and Army Lt. Col. Loyd Frank Lawing, Jr., age 53, was sentenced to 63 months in federal prison, required to pay nearly $1 million in restitution and over $300,000 to the IRS.

Seems that Lawing embezzled nearly $100,000 from the Small Business Administration (SBA) in 9/11 disaster relief funds and over $940,000 from the Auburn University branch of Alpha Tau Omega (“ATO”). Lawings sentence is the longest sentence handed down for a case arising from fraud involving SBA 9/11 disaster relief loans in the nation, according to SBA’s Office of Inspector General.

“Mr. Lawing misused his fiduciary position with ATO and the SBA to embezzle funds,” said U.S. Attorney leura Canary. “His abuse of trust was reprehensible. Mr. Lawing’s sentence should serve as a warning to anyone else who is tempted to use their position to steal.”

According to a press release from the U.S. Department of Justice, Loyd Frank Lawing used the $940,000 embezzled funds for myriad purposes, such as a luxury SUV and $124,199.63 down payment for his new house. Apparently, Lawing also used the stolen money to help keep Bold Horizon Aerospace, Inc., where he was the president and CEO, afloat. Employees of Bold Horizon had no comment.

As a business ethics speaker, I often get asked the question: Is there a personality flaw that causes someone to engage in white collar crime? My answer: No. There are generally three things needed in order for white collar crime to exist: Need; Opportunity and Rationalization. Apparently, Lawing found one, if not more, of those items in order to pull of a fraud of this magnitude.

Before disbanding, ATO owned property at 730 W. Magnolia Ave. In July 2002, the fraternity sold the property for $1.4 million. ATO retained more than $930,000 from the sale, which was intended to eventually be used to buy or build another house, the warrant stated. That money should have been sitting in the bank, growing,” said Paul Kittle, coordinator of Greek life. “Only one person (Loyd Frank Lawing) was responsible for the account. All this does is sort of reinforces the point that when you have money being controlled, have more than one person in charge of the account.”

Rebecca A. Sparkman, Special Agent in Charge for the IRS, Criminal Investigation Division, stated, “The prosecution of individuals who intentionally conceal their income, even if obtained from an illegal source, is a vital element in maintaining public confidence in our tax system.”

Special Note: The comments by Special Agent Sparkman rings true. Not that I am proud of my past, but having spent time in federal prison for tax fraud – the reality is I embezzled funds and didn’t pay taxes on them. Frankly, it never crossed my mind. Regardless, one is taxed on income from all sources – hence, Lawing, much like I, will spend time thinking about his choices and wondering if was ever worth the price.

It is not worth the price! Every choice has a consequence. Make your choices count!

Business ethics speaker, Chuck Gallagher, signing off…