BEAVER COUNTY ACCOUNTANT PLEADS GUILTY TO FRAUD, TAX EVASION
$11.3 million fraud scheme is among region's largest
(January 5, 2005) - A Beaver County accountant has pleaded guilty to federal charges of mail fraud and income tax evasion, United States Attorney Mary Beth Buchanan announced today.
Barry Korcan, 50, of Beaver County, Pennsylvania, pleaded guilty to two counts before United States District Judge Gary L. Lancaster.
Ms. Buchanan said, "Barry Korcan engaged in a decade-long fraud scheme, in which he stole more than $11 million from investors and retirees. He used his position as an accountant to gain his clients' trust and their savings, then destroyed both in order to support his businesses and extravagant lifestyle. His despicable scheme is one of the largest frauds ever perpetrated and prosecuted in Western Pennsylvania."
In connection with the guilty plea, Ms. Buchanan said the court was advised that Korcan operated an accounting and tax preparation firm in Beaver County. From approximately October 1994, Mr. Korcan began to offer some of his clients and other acquaintances investment opportunities. He represented to them that they could invest monies with an organization called Guardian Investments.
Over the period from October 1994 throughout 2004, Korcan induced 39 investors to give him $11,345,222.27, that was to have been invested by Guardian. Guardian did not exist nor did the investment. Throughout the time frame of the scheme, Korcan forwarded false Guardian statements to the investors by U.S. mail. After deducting amounts Korcan paid to investors as periodic interest payments or as account liquidation amounts, the loss to Korcan's victims is $7,265,610.95.
The money provided by victims was placed into a single First National Bank checking account entitled Guardian Investments. It was then used for various real estate and commodities investments by Korcan. Portions of the investment money were also used by Korcan to support his business and his personal lifestyle.
Korcan also filed personal returns (including data on his Schedule C business) which did not correctly reflect his own income, having concealed the fraud proceeds. The tax loss for the tax years 1999 through 2003 is approximately $1.2 million dollars.
As part of the guilty plea, Korcan agreed to the forfeiture of numerous assets purchased with the fraud proceeds, including real estate, investments, bank accounts, automobiles, boats and other personal property. Through the forfeiture process, property forfeited to the United States will be paid over to Korcan's victims.
Judge Lancaster scheduled sentencing for Friday, April 15, 2005, at 2:00 p.m. The law provides for a total sentence of 25 years in prison, a fine of $500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant.
Korcan remains free on bond pending sentencing.
Assistant United States Attorney Paul E. Hull is prosecuting this case. The United States Postal Inspection Service and the Internal Revenue Service, Criminal Investigation conducted the investigation that led to the prosecution of Barry Korcan.
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