Former Inn controller gets 10 years in $6 million embezzlement scheme; but where’s the money?

Bryon Okada of the Fort Worth Star-Telegram contributed to this story. Used by permission. Copyright 2008 The Fort Worth Star-Telegram and the Boca Beacon.

The former controller at the Gasparilla Inn and Club has been sentenced to 10 years in federal prison and ordered to pay nearly $5.8 million in restitution in the wake of her guilty plea to defrauding the island hotel of about $6 million between October, 2002 and January, 2007.

Susan Gail Ray, 52, was sentenced in U.S. District Court in Fort Worth, Texas by U.S. District Judge John McBryde. It was the maximum sentence provided for in Ray’s plea agreement with the government.

Ray pled guilty in November to one count of money laundering, admitting that she defrauded the Gasparilla Inn by fraudulently transferring money out of its bank account and into her own personal bank accounts while she was employed as its comptroller. Ray is currently in federal custody.

Ray began working as the Gasparilla Inn’s comptroller in 2000 and between October 2002 and January 2007, she fraudulently obtained approximately $6,009,500 from the Inn. Ray was responsible for calculating payroll for Gasparilla Inn and transferring payroll funds from the company’s bank accounts.

She submitted payroll figures to the Gasparilla Inn, then, after receiving approval, drafted new bank transmittal forms that contained fraudulently inflated payroll figures. She then submitted the forms to Englewood Bank and instructed Englewood Bank to transfer the fraudulently increased amounts from the Gasparilla Inn’s general account to its payroll account.

After the fraudulently increased sums were wired into the Gasparilla Inn’s payroll account, Ray wired the excess funds from Englewood Bank in Boca Grande into her own personal bank accounts at USAA Federal Savings Bank in San Antonio, Texas, and MacDill Federal Credit Union in Tampa.

After wiring funds into her accounts, Ray withdrew the fraudulently obtained funds and deposited those funds into her account at The Bank in Weatherford, Texas. She used the stolen funds to purchase, among other things, a ranch and horses in Texas.

The question, as the Fort Worth Star-Telegram asked in its Saturday edition, is where is the remaining $4.8 million now?

Is it in a bank account somewhere, or did she spend it on prize horses?

Did she sell $3.8 million worth of horses over the past five years, or are the numbers inflated?

What kind of horses were they?

Did she sell any at all?

What is clear is that from October 2002 through January 2007, Ray used her position as controller at the Gasparilla Inn and Club to steal more than $6 million.

She used at least some of that money to build her Dream Cross Ranch near Boonsville in southwest Wise County, Texas, as well as to purchase other properties in Texas and Florida. Ray owned at least five homes in Charlotte County with a combined value of $800,000. Florida courts have frozen Ray’s Charlotte County assets.

But, in adding up her assets, federal prosecutors found themselves short $4.8 million.

If she doesn’t have cash on hand, “then she still owns the horses,” said attorney William A. Hoskins, who represents the Farish family, which owns the inn. “If she made no sales, then where are the horses?”

The laundering scheme

In 2000, the Gasparilla Inn hired Ray as controller. From Oct. 4, 2002 through Jan. 19, 2007, Ray submitted accurate payroll figures to the inn for approval.

Once approved, she drafted increased payroll forms and submitted the forms to Englewood Bank with instructions to transfer the amounts from the inn’s general account to its payroll account. Ray wired the excess money from Englewood Bank into personal bank accounts in San Antonio and Tampa, then moved it from those accounts into her account at The Bank of Weatherford. At least some of the money was spent on livestock and on Ray’s Dream Cross Ranch in Wise County.

According to the Star-Telegram, court documents showed that defense attorneys argued that Ray’s scheme was not typical of money laundering because it did not attempt to “camouflage” drug sales or other criminal activity, nor did it “plow” legitimized funds into separate criminal activity. Also, Ray refunded $224,608 to the inn before the criminal investigation.

Federal prosecutors, however, argued that this was an attempt to cover up the laundering scheme and not done out of remorse.

Delays and sentencing

In November, Ray pleaded guilty to one count of money laundering. Her sentencing began a month ago but was extended through Friday, March 21 by Judge McBryde to allow federal investigators time to hunt for missing assets.

A March 3 deposition of Ray in a related civil lawsuit filed in Wise County was intended to help the search, but prosecutors said Ray was uncooperative, and the deposition remains incomplete. Ray said she needed access to her computer files — seized during her 2007 arrest — before giving better answers.

McBryde, according to the Star-Telegram, briefly considered further delaying sentencing to allow the deposition to be completed first.

But federal prosecutors said the hunt for the money by the U.S. attorney’s office was largely limited to computer-based searches until McBryde sentenced Ray and ordered her to make restitution.

The office can broaden its post-sentence investigation, lead prosecutor J. Stevenson Weimer said.

Based on the crime and Ray’s lack of criminal history, prosecutors seemed to expect a five-year sentence.

Hoskins asked for the statutory maximum.

McBryde gave her the stiffest sentence allowed under a plea agreement: 10 years. She has been in custody since last month.

“Frankly, I don’t think that’s a sufficient upward departure,” McBryde said. The aggravating circumstance, he said, was the difficulty Ray created in “locating the fruits of her conduct.”

The Star-Telegram reported he also ordered Ray to make $5,784,892 in restitution to the Gasparilla Inn — payable immediately.

However, McBryde said, the inn’s owners might need to spend millions to try to recover the money from the various friends, relatives and associates to whom Ray dispersed the assets.

“You’re going to end up having to sue all those people,” McBryde said.

“It’s almost unbelievable,” Hoskins said, according to the Star-Telegram.

Her explanation

Ray apologized to the court and the Farish family Friday. Members of the Farish family were in court for the original sentencing hearing, but only attorneys were present Friday.

“It was never my intention to harm or hurt anyone,” she said. Instead, she said she manipulated funds to secure her retirement. “It was always my intention to pay back my victim.”

The Star-Telegram reported that she said she could account for most if not all of the money if she had access to her computer files, which would show all her transactions along with dates and check numbers. She was able to produce one year’s worth of such information in court.

However, she said, most of her documentation was in a filing cabinet that had not been returned to her by an “Israeli-based moving company” in Florida.

Hidden assets

Last month, McBryde seemed to be considering an upward departure from the federal sentencing guidelines — and possibly rejecting the plea agreement and sentencing her to more than the negotiated 10 years. At the hearing, prosecutors and a Secret Service agent said they could not definitively say where the embezzled money was.

There was discussion that the money could be hidden in an offshore account or in Europe. It was revealed that an associate of Ray’s had recently traveled to Europe. McBryde delayed sentencing so that the Secret Service could continue to search for the money, requesting an update on March 14.

According to that update, Special Agent Jason Buchanan, acting on an anonymous tip submitted to the FBI, traveled to a property where Ray was believed to be hiding assets.

The Star-Telegram reported he found a climate-controlled horse trailer on the premises. The property owner said Ray and Jimmy Fowler, a former employee of hers, had asked him to store the trailer for them. Fowler told authorities Ray gave him the trailer as payment for work. Tags on the trailer confirm, however, that it belongs to Ray’s Dream Cross Ranch.

Buchanan also investigated a 100-acre horse ranch in Wise County that Ray’s father was negotiating to purchase. The property owner told Buchanan that while he was selling the property to Ray’s father, he had been dealing mostly with Ray herself. Buchanan observed about 50 horses, a tractor, two portable trailers, pipe fencing, and four portable horse shelters at the property.

Fowler identified the shelters as having been at Dream Cross Ranch and transported to the other ranch. Fencing was also transported from Dream Cross Ranch. Based on a conversation with Wise County Sheriff David Walker, Buchanan believes the transfers were made just after Ray’s indictment. The property owner also confirmed that the horses were Ray’s.

The U.S. Attorney’s Office also identified numerous other assets and properties titled to Ray, including five houses in Florida valued at almost $800,000.

In court on Friday, attorneys for the Gasparilla Inn and Club said Fowler now claimed to own all of Ray’s horses.

When McBryde asked how many horses, prosecutors simply said, “Dozens.”

The supposition by prosecutors is that much of Ray’s assets have been placed in the names of others.