World Health Alternatives CEO sentenced in fraud case

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The former president and CEO of World Health Alternatives was sentenced to 130 months in prison today, more than seven years after the accounting fraud he engineered caused the collapse of the Wilkins medical staffing company.

Richard E. McDonald of Leechburg was sentenced by U.S. District Court Judge Joy Flowers Conti at the conclusion of a two-hour hearing that included testimony in Mr. McDonald's support from three witness, including his tearful wife.

Judge Conti was considering a sentence ranging from 188 to 235 months. Mr. McDonald's attorney, Tina O. Miller, had asked for a seven-year sentence, arguing that "no further time is warranted or necessary."

Mr. McDonald was indicted in 2009 on 20 counts of fraud, tax and other charges. He pleaded guilty in April to wire and securities fraud, making false statements to the Securities and Exchange Commission, failing to pay payroll taxes, and income tax evasion.

His sudden resignation from World Health in August 2005 was followed by revelations of serious accounting discrepancies that allowed the cash-starved company to borrow about $6.5 million more than it would have otherwise been able to and avoid taxes.

In court documents, federal prosecutors said Mr. McDonald stole money from the company and investors, causing them losses of $41 million. They said he manipulated the company's financial statements, lied to the company's auditors, the SEC and shareholders, and cheated the government out of $3.4 million in taxes.

World Health's former controller, Deanna Seruga, was sentenced in April to five years of probation in connection with the fraud.

Judge Conti did not impose a fine on Mr. McDonald, saying he could not afford to pay it. He was ordered to pay $39,140 to a World Health shareholder who lives in Carmel, Ind. Assistant U.S. Attorney Shaun E. Sweeney said the shareholder was the only investor who came forward seeking restitution.

The judge ordered Mr. McDonald to report to U.S. Marshals voluntarily after Jan. 1 to begin serving his sentence. He remains free on bond until then.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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