Former Little Rock Attorney Sentenced to 60 Months in Prison for Mail Fraud and Tax Evasion
LITTLE ROCK, AK—Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas; Christopher A. Henry, Special Agent in Charge of the IRS-Criminal Investigation Nashville Field Office; and David T. Resch, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation (FBI) announced today that United States District Judge Brian S. Miller sentenced former Little Rock lawyer David Patrick Henry, Sr., 71, to 60 months in prison to be followed by two years of supervised release. He was also ordered to pay restitution of $1,021,133.74. $862,086.74 of the restitution is to be paid to the Joe Thomas Swaffar Irrevocable Insurance Trust and $159,047.00 is to be paid to the Internal Revenue Service. An agreement was reached to pursue the forfeiture of his property through civil action.
“This case illustrates that our office will prosecute those who steal the financial security of others, no matter their profession or standing in the community,” stated Thyer. “Mr. Henry used his profession as an attorney to hide his thievery from a family who trusted him. Although, elaborate, he ultimately could not hide his scheme from the trust beneficiaries. Now, his future is 60 months in federal prison and a requirement to pay back the money he stole from this family and the money he owed the IRS.”
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money as well as skirt their tax obligations,” said Christopher A. Henry, IRS Criminal Investigation, Special Agent in Charge, Nashville Field Office. “Mr. Henry’s actions not only caused negative ramifications to those financially connected to him, but also the honest taxpayer when he committed significant tax fraud violations as detailed in the indictment. Tax crimes have erroneously been referred to as victimless, but that position could not be more wrong since we all end up paying when someone attempts to evade our tax system.”
“David Henry is a criminal who stole from a widow and her children. We appreciate our partnership with the United States Attorney’s Office and the IRS Criminal Investigation Division as we worked together to bring him to justice,” said FBI SAC Resch.
On March 21, 2014, a federal jury found David Patrick Henry, Sr. guilty of 25 counts of mail fraud and three counts of tax evasion. The jury also found that his home located at lot 38, Pleasant Valley Estates in Little Rock, Arkansas was subject to forfeiture. According to court records, in March 2002, the Joe Thomas Swaffar Irrevocable Insurance Trust was set up naming Henry, Sr. as Trustee. The Trust was to be funded entirely with the proceeds of insurance policies totaling approximately $1,641,614.12 at the time of the death of Joe Thomas Swaffar. The beneficiaries of the Trust were Swaffar’s family members, including his wife and daughter. As Trustee, Henry, Sr. devised, executed and participated in a scheme to defraud the beneficiaries of the Trust by means of false and fraudulent pretenses and representations depriving them of money and the right to control disposition of their money. It was part of the scheme to defraud that Henry, Sr. set up various bank accounts to which only he had access and in which he deposited funds from the proceeds of the Swaffar life insurance policies. Of these accounts, none of the bank statements were mailed to or could be accessed by the Trust beneficiaries. Therefore, the beneficiaries did not know how much money was received from the proceeds of the life insurance policies. The only person authorized to write checks from these accounts was Henry, Sr. Because the Trust beneficiaries did not receive those bank statements, they did not know that Henry, Sr. was writing checks for his benefit and the benefit of his family, including paying for Henry, Sr.’s personal health insurance, personal electric bills, cable television bills, personal mortgage notes for both of his sons, and the purchase of a vehicle for one of Henry, Sr.’s sons, among other things. Henry, Sr. claimed to have paid himself a salary of $2,000 per month for services allegedly performed as Trustee. However, the Trust document does not provide for a salary for the Trustee. Henry, Sr. performed no financial accounting and the Trust beneficiaries were not advised nor did they agree to the salary Henry, Sr. claimed to have paid himself.
In addition, Henry filed joint federal income tax returns with his spouse for calendar years 2005, 2006, and 2007 that failed to report all his taxable income and tax due and owing. For 2005, Henry reported that his taxable income was $0 and tax due and owing was $0, when he knew his actual taxable income for that year was $400,063, resulting in tax due and owing of $114,085. For 2006, Henry reported taxable income of $1,037 when he actually had $55,871 in taxable income for that year, resulting in $7,626 in tax due and owing. Henry filed his 2007 return reflecting taxable income of $1,199, when he knew his actual taxable income was $81,211 for that calendar year, resulting in $13,154 in tax due and owing.
This investigation was conducted by IRS Criminal Investigation and the Little Rock Field Office of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Angela Jegley.