Former health venture chief gets 130 months

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

Richard E. McDonald, 38, of Leechburg, Armstrong County, was sentenced by U.S. District Court Judge Joy Flowers Conti at the conclusion of a two-hour hearing that included testimony in McDonald's support from three witness, including his tearful wife.

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

McDonald was indicted in 2009 on 20 counts of fraud, tax and other charges. He pled 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 to avoid taxes.

In court documents, federal prosecutors said McDonald stole $6 million and caused investors 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.

"He stole $6 million. ... He took it for himself," Assistant U.S. Attorney Shaun E. Sweeney told the judge.

Mr. Sweeney said McDonald's crimes did not involve one act and that he "constantly lied, cheated and stole for two-and-a-half years."

Liane McDonald described her husband of 15 years as a good father, a caring person who cannot say no to people asking for help, and who is remorseful for what he did.

"These are not attributes of a criminal," she said.

World Health's former controller, Deanna Seruga, was sentenced in April to five years of probation in connection with the fraud. Mr. Sweeney said Richard McDonald ruined Ms. Seruga's life by persuading her to go along with doctoring the company's financial statements.

Judge Conti did not impose a fine on Richard McDonald, saying he could not afford to pay it.

In 2009, the SEC waived imposing a $6.4 million payment based on McDonald's gains from the scheme as part of a civil settlement. The agency said his financial statements showed he could not repay it.

McDonald on Tuesday was ordered to pay $39,140 to a World Health shareholder who lives in Carmel, Ind. Mr. Sweeney said the shareholder was the only investor who came forward seeking restitution.

The judge ordered 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: or 412-263-1941.


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