Ovid Timothy Hughes Gets Prison Sentence – Former Employee Steals From Company!

May 19, 2008

As a business ethics speaker, it is interesting to observe how many people believe that theft from their company is somehow O.K.! What’s even more interesting is the fact that, in most cases, they don’t think they’ll be caught.

It takes three things to create a fraud: (1) need; (2) opportunity and (3) rationalization. Seems that Ovid Timothy Hughes fell into the trap of theft for which there is always a consequence.

Ovid Timothy Hughes of Madison, Tennessee was sentenced to 12 months and a day in prison for committing mail fraud. (By the way, wire and mail fraud seem to be the issues that the government uses today to gain an easy conviction)

Hughes previously worked for a well-known computer company. Shortly after the company terminated his employment, Defendant came to possess certain account and credit-card information of the company’s customers. From November 2006 to September 2007, Defendant fraudulently used that account and credit-card information to purchase thousands of dollars worth of computer equipment and other items for his personal benefit. Defendant committed his crime by posing, over the internet and in e-mails, as a representative of the companies whose account information he obtained. He would then order merchandise and have it shipped to his apartment, but have the bill for that merchandise sent to the company’s real address with the intent that the company would pay the charges without realizing the fraud.

Hughes scheme was extensive: During an 11-month period, Defendant used at least nine different account or credit-card numbers, to place over 70 different orders, with approximately ten different merchants. In addition to computers, Defendant also ordered various types of high-end electronic equipment and designer clothing. To conceal his fraud, he assumed several different false identities, created e-mail accounts in the names of those false identities, and made up several fictional scenarios to make his orders appear legitimate when he communicated with merchants’ sales representatives. Ultimately, Defendant caused or attempted to cause over $78,000 in loss, an amount later offset by the approximately $25,000 worth of computer equipment that U.S. Secret Service agents were able to recover at Defendant’s apartment at the time of his arrest.

Judge Trauger found the length and extent of Defendant’s fraudulent conduct to merit a 12-month prison sentence. Defendant was also ordered to pay over $29,000 in restitution to the victims for the merchandise not recovered and to remain on supervised release for three years following his release from prison. As noted by the Court, Defendant’s conduct occurred over nearly a year’s time, involved several very intentional steps on his part, and compromised “inside” information of his former employer. Accordingly, the Court determined that a significant prison sentence was necessary to reflect the seriousness of the offense.

“So-called ‘white-collar’ crimes are just that – crimes. And the U.S. Attorney’s Office is committed to aggressively prosecuting such crimes whenever and wherever they occur in the Middle District of Tennessee,” said U.S. Attorney Edward Yarbrough. “This case is yet another example of how criminals use the anonymity of the internet and e-mail, along with false identities and deception, to commit frauds. But it also demonstrates the hard work and skill of the federal agents who combat those frauds. The U.S. Attorney’s Office will continue to fully support the law-enforcement agents and agencies who help protect innocent fraud victims and bring those who target them to justice.”

Every choice has a consequence. While Hughes will find that the cost of the choices he made is far greater than the short term benefit he received, the “un-named computer company” will likely change their internal controls so that it will be more difficult to gain sensitive information.

White collar and business ethics speaker, Chuck Gallagher, signing off…