Kansas City Woman Pleads Guilty in $3 Million Fraud Scheme That Forced Employer to Close
KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., woman pleaded guilty in federal court today to a nearly $3 million fraud scheme that forced her employer out of business.
Irene Marie Brooner, 52, of Kansas City, pleaded guilty before U.S. District Judge Beth Phillips to bank fraud.
Brooner, a certified public accountant, worked at Galvmet, Inc., a sheet metal fabrication facility and steel service center located in Kansas City, from 2001 until her termination in February 2014. At its peak in 2008, the company had 26 employees and $14 million in annual sales. Galvmet filed for bankruptcy and ceased operations in 2014. At the time of closing, the company had 18 to 20 employees and $10 million in annual sales.
Brooner’s duties as controller included managing payroll, accounts receivable and payable, and maintaining the ledger at Galvmet.
Brooner admitted that, over a period of more than 10 years (January 2004 until February 2014), she created a total of 389 unauthorized Automated Clearing House (ACH) transactions from Galvmet’s bank account to her personal bank accounts. (An ACH is a batch-oriented funds transfer system that includes direct deposits of payroll from companies.) Those unauthorized ACH transactions included 148 payments to her checking account and 133 payments to her savings account. Brooner also defrauded Galvmet by inflating her salary. From March 2004 to December 2011, Brooner manipulated the payroll account to increase her net pay on approximately 108 payroll checks.
Brooner’s fraud scheme resulted in a loss of at least $1,863,914 to Galvmet. As a result, Galvmet ceased operations. While reviewing bank records during the filing of Galvmet’s Chapter 13 bankruptcy in February 2014, the company’s president noticed unauthorized transfers from Galvmet’s payroll account to Brooner’s personal account. He reported the apparent embezzlement to the FBI.
To keep the scheme going, Brooner also falsified documents to support Galvmet’s operating loan with Missouri Bank & Trust, causing an additional loss to the bank of $1.1 million. The total loss from Brooner’s fraud scheme was at least $2,963,914.
Brooner spent the embezzled funds on personal items. According to today’s plea agreement, Brooner spent some of the proceeds to remodel, stock, furnish and decorate the ornately-finished bar in the basement of her new home. The bar, which she called “the Dirty Duck,” includes seating for approximately 15, a granite bar top, four or five tap lines, a refrigeration system, three flat-screen televisions, a smoke machine at the entrance, two couches and stained wainscoting around the room approximately eight feet tall. Mannequins, positioned throughout the bar, are outfitted with authentic U.S. and German uniforms and weaponry from the World War II era, including a Thompson sub-machine gun and multiple M-1 Garands with attached bayonets. Brooner told FBI agents that her husband, a carpenter, remodeled the bar in 2003 and 2004. From 2004 to 2014, Brooner spent $18,383 on alcohol.
Brooner’s spending included paying off her mortgage for $289,290, buying $81,686 in jewelry, and spending at least $400,392 on clothing and other retail, $97,180 on restaurants, $78,439 on vehicles, $169,389 on furniture and home decor, $62,003 on travel, $38,317 on electronics, $21,346 in ATM withdrawals, $59,571 on spa visits and beauty items, $68,745 on tuition for her children, $18,383 on alcohol, $104,060 to her children, $216,377 in assorted checks under $500, $64,557 in donations, $254,168 in other credit cards, and by purchasing other items.
Brooner purchased a 2004 Lexus R33 sport utility vehicle, on which she made 64 payments totaling $51,813. Brooner also bought 69 pieces of jewelry and accessories from Meierotto’s Midwest Jewelers totaling approximately $29,701 and 82 pieces of jewelry and accessories from Tivol Jewelers totaling approximately $51,984.
Under the terms of today’s plea agreement, Brooner must forfeit to the government her personal residence, a 2004 Lexus, numerous assorted jewelry and a money judgment of at least $2,963,914, all of which represent the net proceeds obtained and loss caused by Brooner’s scheme.
Under federal statutes, Brooner is subject to a sentence of up to 30 years in federal prison without parole, plus a fine up to $1 million, and an order of restitution of $2,963,914. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by the FBI.