The Chief Financial Officer of a Missouri-based logistics provider embezzled more than $6.5 million from his employer, using one-third of it to buy a ‘beach house' in the Cayman Islands.
Ferrell could get 30 years in federal prison without parole, the U.S. Attorney's Office for the Western District of Missouri said in a Thursday release. He pleaded guilty to wire fraud and money laundering.
He admitted to using his position to make unauthorized personal charges to the company’s credit card and PayPal accounts, then using company funds to pay the charges. The fraud started in 2006 and lasted until 2014, the release says.
Douglas Lee Ferrell, a client of Cayman National Bank, wired over $2.25 million to make the purchase, much of which was the proceeds of fraud from his employer, Scarborough International, Ltd., he admitted. In his plea agreement, Ferrell agreed to the details of his crimes.
Ferrell also made a number of financial transactions of funds that he knew were the proceeds of fraud, including a $650,000 wire transfer (that contained at least $475,625 in fraud proceeds) to Cayman National Bank in the Cayman Islands to purchase a beach house on March 24, 2014.
Ferrell wired a total of more than $2,250,000 to purchase that property. Ferrell also used embezzled funds to ship furnishings from the United States for the property and for additional construction and improvements to the property, including over $77,000 in payments to a Cayman Islands tile company. After the improvements, paid for with additional embezzled funds, the property was valued at over $2.6 million.
Ferrell pleaded guilty to one count of wire fraud and one count of money laundering at federal court in Kansas City on August 3rd. He is due to be sentenced on December 1st. He faces a maximum penalty of 20 years in prison and a $250,000 fine on the first count and ten years in prison and a $250,000 fine on the second count.
He has agreed to forfeit property in an amount equal to the amount of restitution that will be determined at sentencing and which is estimated to be $1.9 million. The final amount of restitution will be determined at Ferrell’s sentencing hearing but is estimated to be $1,940,462 due to Ferrell’s partial repayment of restitution. The company has recouped a significant portion of its loss.
Sentencing for Ferrell is scheduled for Dec. 1. Under federal statutes, Ferrell is subject to a sentence of up to 30 years in federal prison without parole.
The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a pre-sentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Brian P. Casey. It was investigated by IRS-Criminal Investigation and the Kansas City, Mo., Police Department.
“This individual broke the law and violated our trust,” the company said Thursday in a written statement. “Fortunately, we have recovered the majority of funds involved and no customers were impacted.”
The company called it a “difficult and painful period. “Throughout this process, we have remained focused on meeting the needs of our customers and taking the necessary steps to ensure that this type of activity can never happen again,” the statement said. “We are extremely grateful for the continued commitment and dedication of our employees and the ongoing trust and confidence of our customers.”
Scarbrough International is a privately owned, U.S. Customs Broker and international freight forwarder. Ferrell, 34, joined Scarbrough as an account representative in 2005 and become CFO in 2012.