James Spaulding, 26, of Indianapolis, was accused in federal court of serving as the central player in an eight-person conspiracy, according to an Indianapolis Star report. Spaulding, who was a temporary worker at the fund from January 2002 to July 2002, is accused of altering the accounts of seven retirees who died in the 1980s so he and his friends would get their money – some $226,773, according to the report.
Spaulding and four suspected accomplices were arrested Friday, while police are still searching for three others. Only Spaulding worked at the pension fund. The eight have been charged with 17 federal counts of conspiracy, bank fraud, and money laundering. Prosecutors alleged that Spaulding changed the names on the accounts of dead retirees to the names of the seven others accused in the scheme, and cut checks in their name(s). On Spaulding’s last day at the fund, he allegedly cut nearly $100,000 worth of checks to his acquaintances. According to the Star, Spaulding left the fund July 3, 2002, because he had found a full-time job.
Internal auditor Caroline Bradley and Crowe Chizek, an independent accounting firm, alerted police to the scheme. These latest charges come as part of a year-long criminal investigation into the pension fund by the Indiana State Police, the Internal Revenue Service, and the US Secret Service – an inquiry triggered after the discovery that the fund’s former chief benefits officer Walter Kevin Scott’s pension fund job gave him access to the Social Security numbers, death records, and bank account numbers for the 200,000 member employees of the Public Employees’ Retirement Fund.
Scott was hired in November 2001, even though he served two months in federal prison for stealing the names and Social Security numbers of two people to fraudulently secure loans and lines of credit. Scott was convicted in Ohio in 1996 (see Probe Continues into Former Pension Benefits Officer ). Ironically, Scott was initially charged with stealing another man’s identity to land his job at the pension fund.
Earlier this year another temporary employee at the fund, Shaunna L. Stone, was indicted in the theft of more than $22,500 from the accounts of pension fund members. Stone, who worked at the agency for eight months, has agreed to plead guilty to 22 federal charges, pending a judge's decision. State and federal investigators claim to have found evidence that she stole more than $23,000 and the identities of at least 70 public employees (see Another Indiana Pension Worker Accused of ID Theft ). Spaulding worked at the fund at the same time as Scott and Stone, but authorities have not linked the trio.
In the most recent discovery, Spaulding, a temporary worker with a company called Daystar, was given access to the fund's money and member personal information, even though he had a criminal history in Indiana that included convictions for battery and criminal recklessness with a deadly weapon. At that time, the fund did not run criminal background checks on temporary employees.
However, since Spaulding's departure, the fund has stopped using temporary workers and now requires background checks on all employees, according to the Star report, quoting IPERS Executive Director Craig Hartzer, who took over the helm at the fund in February. Since, then an audit of practices at the fund has also turned up other needed control procedures, as well as the unintended overpayment of some $170,000 to deceased participants (see Indiana Pension Pays Out $170,000 To Deceased Participants ).
According to the Star, Spaulding was ordered held in the Marion County Jail because prosecutors called him a flight risk. Walter Holloway, 30, and Aaron Price, 28, were ordered to wait for their next hearing at the Volunteers of America work-release facility. Ladonna Jackson, 38, and Debra Turner, 48, were allowed to go home, but with electronic monitoring. Police are asking for the public's help in finding Carson Bryant, 26; Charles Burney, 26; and Correy Harrison, 23, all of Indianapolis. Anyone having information should call the Indiana State Police at 1-317-899-8583.
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