Kansas Woman Sentenced for $561,000 Fraud Scheme

KANSAS CITY, MO—Tammy Dickinson United States Attorney for the Western District of Missouri, announced that a Leavenworth, Kansas woman was sentenced in federal court today for a bank fraud scheme in which she embezzled more than $561,000 from her North Kansas City, Missouri employer.

Paula A. Cathey, 53, of Leavenworth, was sentenced by U.S. District Judge Dean Whipple to three years and five months in federal prison without parole. The court also ordered her to pay $556,935 in restitution.

On October 10, 2012, Cathey pleaded guilty to 15 counts of bank fraud. Cathey was employed from September 7, 1997 through March 31, 2011, as the controller for Mega Industries Corp., a heavy highway and general contractor construction company in North Kansas City with approximately 25 employees.

Cathey admitted that she embezzled approximately $561,552 as a result of her fraud scheme. Cathey obtained checks from the office of a subordinate, wrote unauthorized checks to herself and, without the knowledge or consent of the company presidents, forged their signatures on the checks. Cathey deposited the checks in her personal bank account and used the money largely for gambling.

In order to conceal her fraud, Cathey manipulated the company’s ledgers and created false accounting entries. Cathey was the first person to get the mail; when monthly bank statements came in the mail, she removed them and destroyed most of them.

This case was prosecuted by Senior Litigation Counsel Linda Parker Marshall. It was investigated by the FBI.