Maine Man Pleads Guilty to $900,000 Embezzlement from a Federally Funded Program
On July 31, 2012, Thomas Nelson, former Chief Executive Officer of York County Community Action Corporation (YCCAC), pled guilty in United States District Court, Portland, Maine, to conspiracy, embezzlement from a federally-funded program, tax evasion and signing false tax return charges. Some of the monies were funded through the American Recovery and Reinvestment Act of 2009 (ARRA).
YCCAC provides social service, health, educational, and transportation-related assistance to York County individuals and families living in poverty. From 2006 to 2010, YCCAC received in excess
of $30,000,000 in federal funds to be used for those purposes, including approximately $7 million in Federal Transit Administration (FTA) grants. Some of the FTA grants, including those for the rural transit assistance program and urban transit assistance program, were authorized by ARRA.
The investigation disclosed that from 2004 to 2010, Mr. Nelson embezzled approximately $900,000 from YCCAC. He diverted $413,000 in funds to a consulting company that had only submitted one invoice for $8,700. In exchange for the fraudulent payments, the consulting company paid more than $20,000 of Mr. Nelson’s personal expenses, including his home mortgage and also provided Mr. Nelson with a cash kick-back. From 2004 to 2009, Mr. Nelson diverted more than $400,000 in YCCAC funds to a defunct non-profit entity, New England Community Action Agency (NECAA), and recorded those payments as donations or consulting expenses. After transferring these funds to NECAA, Mr. Nelson used more than $300,000 to gamble and to pay personal credit card bills and his home mortgage, failing to report over $400,000 in embezzled income to the Internal Revenue Service (IRS). Finally, in 2005 and 2006, he prepared and signed NECAA tax returns which suggested the agency had revenue and assets when it did not.
As part of his plea agreement, Nelson agreed to pay restitution of approximately $1.2 million to YCCAC and $150,000 to the IRS.
This case was investigated by the U.S. Department of Transportation, Office of Inspector General (OIG), IRS, as well as the U.S. Department of Health and Human Services-OIG, U.S. Department of Housing and Urban Development-OIG, and U.S. Department of Agriculture-OIG.