Six Plead Guilty to Defrauding the United States

Date: 
Tuesday, July 2, 2019
Office Affiliation: 

From the U.S. Attorney's Office, Western District of Virginia:

Abingdon, VIRGINIA – Two employees of Kennedy Industrial Electronics, and their wives, have pleaded guilty to a payroll tax scheme that dates back at least 15 years and with defrauding the United States out of more than $907,000 of disability benefits, in addition to $148,000 in employment taxes, United States Attorney Thomas T. Cullen announced today. An additional employee was indicted by a federal grand jury on June 25, 2019, on similar charges. 

Yesterday in U.S. District Court in Abingdon, Harold Kennedy, 64, and Hollie Kennedy, 67, both of Lebanon, Va., the owners of Kennedy Industrial Electronics, Inc., pleaded guilty to one count of conspiracy to defraud the United States and one count of failing to pay over and collect employment taxes.

Last week, Danny M. Hill, 70, of Lebanon, Va., pleaded guilty to one count of conspiracy to defraud the United States. Geneva Hill, 64, of Lebanon, Va., pleaded guilty to one count of causing to be made a false representation concerning the requirements of the Social Security Act.  In addition, last week Gerald Lee Stevens, 45, of Lebanon, Va., pleaded guilty to one count of conspiracy to defraud the United States. Teena Charlene Stevens, 47, of Lebanon, Va., pleaded guilty to one count of causing to be made a false representation concerning the requirements of the Social Security Act.  Ricky Allen Matney, 58, of Honaker, Va., was indicted on one count of conspiracy to defraud the United States and two counts of providing false information to the Social Security Administration.     

“Disability, payroll, and other types of employment fraud are serious federal crimes and ones that, collectively, put a significant burden on vital government programs,” U.S. Attorney Cullen stated today.  “As this case indicates, the Department of Justice will vigorously investigate and prosecute these types of workplace-fraud schemes and hold those who profit from illegal activities accountable.”

According to documents filed with the court, between 2001 and 2015 the defendants conspired to defraud the United States through a scheme in which Harold and Hollie Kennedy, the owners of Kennedy Industrial Electronics, failed to report approximately $148,000 in employment taxes. Those taxes were owed through hours worked by employees Danny Hill, Gerald Stevens, and Ricky Matney.

However, Danny Hill, Gerald Stevens, and Ricky Matney were each receiving disability benefits from the Social Security Administration and therefore unable to earn additional income without reporting. As a result, the conspirators issued checks to their spouses, Geneva Hill and Teena Stevens, and others.

Defendants Danny Hill, Gerald Stevens, Ricky Matney, Harold Kennedy, and Hollie Kennedy each face a prison sentence of up to five years on the conspiracy charge.

The investigation of the case was conducted by the Internal Revenue Service (Criminal Investigations), the Social Security Administration Office of the Inspector General, and the Russell County Sheriff’s Office.  Assistant United States Attorney Lena Busscher is prosecuting the case for the United States.