A Sherwood woman who for three years administered the business expenses of a group of central Arkansas physicians was convicted Wednesday of embezzling more than $611,000 from the doctors.
After a trial that lasted a week and a half, federal jurors deliberated only about two hours before finding Lynn Alisa Espejo, 52, guilty of 15 counts of wire fraud for electronically transferring funds from the doctors' books into her own accounts on 15 occasions.
The eight-woman, four-man jury also convicted Espejo of six counts of money laundering for using the stolen funds to make personal purchases, as well as four counts of filing false income tax returns, for failing to report the stolen funds as income in tax years 2007, 2008, 2009 and 2010.
Espejo contended that at least one of the doctors she worked for had authorized her to "reimburse" herself from the doctors' business accounts for purchases she made at his request using her own money. However, that doctor, Bruce Sanderson, and three others -- Paul Zelnick, James Thrasher and Scott Brown -- testified that Espejo wasn't authorized to take the money.
Outside the presence of jurors, Espejo's attorneys said she had been sexually assaulted in 2010 by another doctor who later left the group, but the doctor was never charged and U.S. District Judge Kristine Baker refused to let defense attorneys mention it in front of jurors.
The embezzlement case was investigated by the criminal investigation division of the IRS, whose agent, John Shortway, last week described for jurors the 15 wire transfers Espejo made from the doctors' administrative accounts into three of her personal accounts, two of which she shared with her husband.
The transactions were made using QuickBooks accounting software and the Intuit payroll system.
Dawn File, an out-of-state investigator for the software company, described the inner workings of both systems for jurors and explained how Intuit's audit-trail feature permanently captured each action taken by the person entering or altering the information.
Jurors also heard from James "Neil" Anderson Sr. of Anderson Minnow Farms in Lonoke, who testified that he suspected Espejo, whom he knew as Lynn Denton, of stealing money from that business while working as its bookkeeper for six months, until May 9, 2012.
Although Anderson said he didn't have time to pursue charges against the woman, Baker let prosecutors introduce the testimony in their effort to show Espejo's propensity for dishonesty and "absence of mistake." Espejo contended that Anderson wrongly suspected her of the theft only because he had heard about the doctors' accusations.
Pulaski County Circuit Court records show that in 2004, Espejo, then known as Lynn Roller of Dermott, married Pancho Espejo. The records show that in July 2011, she changed her name from Lynn Espejo back to her maiden name, Lynn Alisa Denton.
Espejo was originally indicted on 59 federal charges in 2011, but prosecutors later withdrew that indictment and refiled the allegations under a different theory in 2014.
In addition to the money that was stolen by wire transfer, Assistant U.S. Attorneys Jamie Goss Dempsey and Stephanie Mazzanti presented evidence that Espejo obtained a debit card in the name of Practice Management Services Inc., which was one of the corporations the doctors established in 1994 to administer their business expenses.
The other was Blandford Medical Services Inc. Espejo, who has an accounting degree, did the bookkeeping for both corporations from 2007 through 2010.
Espejo used the unauthorized card for personal purchases at Wal-Mart, including items such as snow crab, bacon and popcorn balls, video gaming devices, school supplies and a trampoline, prosecutors said. They said she also used stolen money to make payments toward a vehicle, a swimming pool at her home, and expenses of constructing a new home.
Those expenditures resulted in the money-laundering counts, since the funds used were considered proceeds of fraud.
From 2007 through 2010, Espejo had over $100,000 in legal expenses, over $479,000 in credit card payments and went significantly over budget on the construction of her house, including adding a pool house, the prosecutors said.
They said she underpaid her taxes by $207,941 for the tax years 2007 through 2010 as a result of not reporting the stolen funds.
"As this year's tax filing deadline approaches, today's conviction of Ms. Espejo is a powerful reminder that income from all sources, including fraud, is taxable," Tracey Montano, IRS special agent in charge, said later Wednesday in a news release.
Espejo, who was represented by attorneys John Kennedy and Pat Benca of Little Rock, will be sentenced after a pre-sentencing investigation is completed by U.S. probation officers.
The statutory penalty for wire fraud is up to 20 years in prison and a fine of up to $250,000. Money laundering is punishable by up to 10 years and a fine of up to $250,000 or twice the amount of the criminally derived property involved. The income tax charges are each punishable by up to three years in prison and a fine of up to $100,000.
Sentencing guidelines, which take into account individual circumstances, also will be considered at sentencing.
Metro on 02/09/2017