From the Beckley Register-Herald:
Note: See my earlier post regarding this case here. Each defendant faces a maximum of 30 years in federal prison. Obviously each will receive less than that. Their sentencing, which will take place in June will follow the federal sentencing guidelines, which I will not attempt to decipher in this post. Almost positively however, they all will do time. You can also read today’s Charleston Gazette article about this case here, and the Charleston Daily Mail article here. – John H. Bryan, West Virginia Criminal Defense Attorney.
Three plead guilty in cattle, bank scandal
A businessman and two former bank officials pleaded guilty Monday in Beckley’s federal court to charges stemming from a Greenbrier County $4.2 million cattle and banking scandal.
A federal postal inspector testified that an investigation by State Police involving dirty dealings by cattle broker Kevin Scott O’Brien, of Ronceverte, also led to separate criminal charges being filed against former First National Bank of Ronceverte president and CEO Charles A. Henthorn and former First National Bank board director ****.
Last month, O’Brien, 28, was charged in an information with one count of mail fraud, but the complaint also listed several instances of fraudulent business practices including “phantom herding” — selling the same cattle to multiple buyers — check kiting, bribing a bank official, and running pyramid or “Ponzi” schemes.
Prosecutor’s say O’Brien used sophisticated schemes to defrauded investors and businesses out of $4.2 million beginning in early 2005 while brokering cattle deals in West Virginia, Illinois, Texas, Virginia and Nebraska.
Monday’s testimony revealed O’Brien signed a plea agreement with prosecutors in May 2006 and then helped police gather evidence against Henthorn, 48, by wearing an undercover wire which secretly taped the bank president incriminating himself about taking bribes.
Prosecutors then used that evidence and more in persuading Henthorn to wear an undercover wire which recorded incriminating statements made by ****.
There was no evidence that **** wore an undercover wire during the federal investigation which also included FBI and FDIC officials. State Troopers Sgt. V.S. Deeds and W.A. Pendleton, who brought their investigation to federal prosecutors, were present for Monday’s hearing.
Last month, Henthorn was charged with accepting nearly $10,000 in bribes from O’Brien, and **** was charged with aiding and abetting those bribes. Henthorn originally brokered his deal with prosecutors nine months ago and **** signed a plea agreement last August, Forbes said.
When asked why nearly two years had elapsed since O’Brien’s first contact with prosecutors, Forbes said O’Brien’s and Henthorn’s cooperation “took many months to develop.”
“There is no evidence that any criminal activity goes beyond these three defendants,” U.S. Attorney L. Anna Forbes said after the hearing.
O’Brien softly said “yes, your honor” when U.S. District Judge Thomas E. Johnston asked him point blankly: “Did you do it?”
Although O’Brien’s felony charge was specifically based on a $362,000 check he received in the mail after defrauding a Virginia cattle owner, much of Monday’s testimony concentrated on the four bribes O’Brien gave to Henthorn.
Postal Inspector Burl Fluharty testified **** introduced O’Brien to the bank president and told the cattle broker that Henthorn had “the keys to the bank.”
“**** advised O’Brien that payments to Charles Henthorn would help him procure loans,” Fluharty said. “**** facilitated these bribes to the bank president.”
Forbes said O’Brien gave Henthorn four separate bribes in late December 2005, with two cash payments totaling $2,200 and two checks written from his Shamrock Farms business account of $2,500 and $5,000. Forbes entered both checks into the court record as evidence against O’Brien and Henthorn. Henthorn was represented by Charleston lawyer James Cagle.
“It was expected that Charlie Henthorn would extend favorable treatment to Kevin O’Brien and be generally influenced in banking matters,” Fluharty told the court. No specific loan was tied to the bribes.
All three defendants posted a $10,000 unsecured bond and were immediately released after Monday’s hearing. None were available for comment. Each faces a maximum prison sentence of up to 30 years; however, it is unlikely that any of the sentences will be that stiff. Johnston set all three sentencing hearings for 10 a.m. June 30. The trio also face a bevy of fines.
O’Brien, a 1999 graduate of Greenbrier East High School, told the court he previously had worked for his father’s asphalt and excavating business and a NAPA store prior to brokering cattle deals. His federal bankruptcy case is still pending and one court official said O’Brien’s liabilities now total almost $8 million.
Forbes said “close to a dozen victims” were cheated out of money by O’Brien.
O’Brien’s defense attorney, Rodney Smith of Charleston, suggested that the $4.2 million number that prosecutors say his client defrauded investors will be challenged. Karin Nelson, who claims O’Brien cheated her out of $200,000, attended the hearing but declined comment.
Henthorn told the court he had been in the banking industry for 25 years. A former bank examiner, Henthorn resigned from First National last summer after working there for over 10 years.
****, who was represented by Charleston lawyer Michael Cary, said he began working in the real estate business with his father in 1974. He now owns two Virginia car dealerships and is a Realtor and auctioneer. **** had been on the bank’s board for eight years until his resignation last July.