BREAKING: Shaw: Trucking Company President Accused of Stealing Employee Funds

CLEARFIELD – A 55-year-old Morrisdale man, Timothy Lee Kephart, has been accused of stealing employee funds, announced Clearfield County District Attorney William A. Shaw Jr. today.

Trooper Jeffrey Walters of the Pennsylvania State Police, Bureau of Criminal Investigations – Organized Crime Task Force, has filed a criminal complaint against Kephart. He’s charged Kephart with 584 theft-related offenses.

According to the criminal complaint, from June of 2010 until late 2013, Kephart served as the president of the Kephart Trucking Company. In his position, Kephart handled the company’s day-to-day operations; during the aforementioned timeframe, employees’ paychecks depicted that funds were being withheld for a number of items, including 401K contributions, 401K loan repayments and medical insurance coverage.

Upon investigation it was found that withholdings were not being utilized for the appropriate purposes. It was found that these funds were being held in the company checking account and used for other expenses, causing a shortage of individual 401K funds and a lapse in payment of insurance premiums, states the criminal complaint.

As a result of Kephart’s failure to pay medical insurance premiums, the insurance company retroactively cancelled the insurance coverage, which caused a number of employees to be responsible for their medical bills. It was also determined that several employees were not paid for days of service as well as for unused and used vacation pay, states the criminal complaint.

Upon an extensive investigation, it was determined that there were 131 victims affected by Kephart’s actions. The victims reported that Kephart acknowledged the missing funds and assured they would be paid back; however, the victims were never reimbursed in regards to the 401K funds, back-pay/vacation pay and medical bills, which have accrued. In total, it was determined that Kephart had misappropriated in excess of $329,000 from the victims, according to the criminal complaint.

The investigation revealed that Kephart diverted business funds for personal use, including the construction of a $300,000 barn located at his residence. Additionally, it was determined that Kephart obtained $100,000 from investors for the purpose of satisfying outstanding balances owed towards employee 401k investments, which he diverted from the business for personal use.

Shaw stated that the charges filed against Kephart were the result of a “substantial investigation” by the Pennsylvania State Police and the U.S. Department of Labor. Shaw also elaborated that due to the nature of the case, a certified fraud accountant was retained to further investigate and to confirm “the money trail discovered by law enforcement officers.”

Shaw stated that Kephart’s actions significantly affected the livelihood and well-being of the 131 employees who were victimized in this case.  These charges, he stated, are the first step in the process of bringing justice to the victims.  Shaw also emphasized that this type of criminal activity is intolerable and continued efforts will be made to identify, investigate and prosecute criminals responsible for this type of behavior.

Shaw thanked the Pennsylvania State Police, the U.S. Department of Labor and the U.S. Attorney’s Office, Johnstown, for their assistance. Shaw indicated that Kephart is currently serving a 46-month sentence for his involvement in a $3.6 million check-kiting scheme against a bank in Huntingdon, Ohio.

Kephart is currently incarcerated at the Federal Correctional Institution, Loretto, and will be transported to Clearfield County for arraignment before Magisterial District Judge Jerome Nevling. A preliminary hearing will be scheduled in the near future, according to Shaw.

Anyone with knowledge of a crime is asked to call Clearfield County Crime Stoppers at 800-376-4700. All calls to Crime Stoppers are confidential. Anonymous tips can also be submitted by visiting the Clearfield County District Attorney Web site at “www.ClearfieldDA.org” and selecting “Report A Crime.”

 

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