Appearing in the courtroom of U.S. District Judge Joe Heaton, Steve Jones, president of Norman-based McSha Properties Inc., sat with his attorney, Robert McCampbell waiting to hear if the federal judge would accept the plea of guilty agreed to by both the defense and prosecution.
Jones appeared Tuesday in the U.S. District Court, Western District of Oklahoma, as the sole representative of McSha, the company that has been accused by federal prosecutors of having defrauded a federal tax credit program designed to develop low-income housing projects.
Specifically, McSha is charged with wire fraud and money laundering after former company executives allegedly set up two shell companies to receive and distribute the proceeds in a scheme which operated between March 2003 and August 2006. The scheme netted almost $6 million, reports say.
After the investigation, prosecutors offered to allow McSha to pay restitution to the government, including: $1 million to be paid Tuesday, followed by four installment payments of $250,000 to begin in June. Payments of $2.1 million would begin after that for a total of more than $4.1 million in forfeiture and restitution. The company also agreed to pay a fine of $500,000.
McCampbell and federal prosecutor Scott Williams made their cases before Heaton, explaining their reasons as to why it was appropriate and just, including the fact that other options could lead to McSha employees losing their jobs or the company ending up in the hands of others. In any event, Heaton was not entirely convinced with this plea, noting how white-collar criminals would love to be able to "write a check" and move on and how that sends a bad message.
"I don't lightly second-guess the government," Heaton said. "But I cannot see how in the circumstances here that the best interest of justice is served that lets individuals avoid criminal exposure."
The people implicated in the case were CEO Larry Shaver, CFO Pat Colbert, and Howard Michael Wampler, vice president of Tax Credit Construction.
The trio allegedly created a limited partnership to build low-income housing in Choctaw, according to prosecutors. They also formed WFT, LLC, a phony construction company in Texas that was said to have worked on the project.
They have all resigned.
Company shareholders Jones and Michael McClure, the remaining partners of McSha, have voluntarily signed the plea as guarantors.
In a release to the media, Jones said his company fully cooperated with the federal investigators and did their own investigation which corroborated what the government had discovered.
Documents compiled by investigators describe how Shaver, Colbert and Wampler set up a shell company.
In the meantime, the court is in recess and it is not entirely clear what the next step will be.
"We are currently evaluating how next to proceed," said First Asst. U.S. Attorney Bob Troester.
This approach was echoed by McCampbell who said his team was trying "to find an appropriate resolution to this matter."
Jones, however, was more in-depth in his response, saying, "We are surprised by the judge's decision because we believe the information speaks to who was involved and those persons are no longer with our company.?While we respect the judge's position, we believe it's in the interest of justice and our employees and residents that McSha be allowed to pay restitution and a fine and withdraw from the tax credit program."
Jones continued, saying, "As principal shareholders of this 24-year-old company, Michael McClure and I voluntarily added our names as guarantors of the restitution to be paid. We've done that because this company and its shareholders benefited from a federal tax credit construction development program and we want to pay back the federal government and withdraw from the program."
Jones concluded saying that McSha's private property management division and other entities such as McSha Homes Inc. and Devonshire Homes Inc. have not been implicated in this matter in any way.
Having had their plea deal rejected in January by a federal judge here, the defendants in a federal case involving work at a low-income housing project scheme have taken their case to the 10th Circuit Court of Appeals in Denver.
