U.S. Attorney's Office
Western District of Kentucky
(502) 582-5911
August 10, 2015

Former Owner of Virginia-Based Stonewood Marketing Pleads Guilty to Mail Fraud; Diverted and Stole $1,124,273.35 Intended for Political Campaigns, PACs, and Non-Profit Organizations

LOUISVILLE, KY—The former vendor for multiple local, state, and federal campaigns, PACs, and non-profit organizations throughout the United States, including the McConnell Senate Committee pleaded guilty to three charges of mail fraud today, in U.S. District Court, for stealing more than $1.1 million in contributions and donations intended for committees and organizations announced United States Attorney John E. Kuhn, Jr. “Samuel Pate, while working in a position of trust for political campaigns, political action committees and non-profit groups, stole more than a million dollars,” stated U.S. Attorney Kuhn. “These organizations—as well as earnest citizens trying to participate in the political process through contributions—were unknowingly victimized by Pate’s selfishness and avarice. He used the stolen funds for personal expenses, vacation homes, luxury vehicles and jewelry. Thus far, due to the efforts of my office and the FBI, nearly half of all the stolen funds have been recovered and are being returned to the victim organizations.”

“Mr. Pate intentionally diverted campaign contributions and political action committee donations for his own personal financial gain. As such, Mr. Pate’s actions subverted the political process by denying individuals their right to participate in the political process,” stated SAC Howard S. Marshall, “In a democracy, there is simply no greater right than to elect our political leaders. Anyone attempting to corrupt the political process, in this way or any other, will be investigated as a top priority for our office.”

Samuel K. Pate, Jr., age 52, of Forest, Virginia, owned and operated Stonewood Marking in Forest, Virginia. Campaigns, PACs, and organizations contracted with Pate to process contributions received through direct mail and to maintain donor records when required by the Federal Election Commission (FEC). Donations were received by the Campaign, PACS, and organizations through the mail at their local offices, then automatically forwarded through the U.S. mail to Stonewood Marketing for processing. Pate maintained designated bank accounts at BB&T for the deposit of donations and campaign contributions.

According to the federal information, from February 2008 through November 2014, Pate routinely misappropriated client funds by diverting funds from their designated accounts or transferring funds from client accounts into other bank accounts he controlled. During the course of the scheme he stole donations and contributions totaling approximately $1,124,274.35 that were intended for the following political campaigns, PACs, and non-profit organizations: McConnell Senate Committee—$118,294; Christians in Defense of Israel—$319,691.09; House Conservative Fund—$30,614; Vitter for Senate (Louisiana)—$480,821.26; Catholic Advocates—$153,445; Jewish Voice—$150; Reagan Action—$1,025; Ten Commandments Commission—$2,098; Republican Majority Campaign—$11,300; Policy Issues Institute—$2,280; Defund Obamacare—$100; NRSC—$100; Randall Terry for Senate—$6; Freedom Defense Advocates—$990; Frontline Ministries—$1,150; Christian Anti-Defamation League—$2,020; and Live Prayer—$190.

During this period, Pate used the stolen and misappropriated funds to pay credit card bills, purchase vehicles, condominiums in Myrtle Beach, South Carolina, decorate a residence, pay family members, and pay personal expenses.

From February 2008 through November 2014 Pate paid approximately $284,841.85 in personal American Express credit card bills using stolen funds and transferred approximately $237,100 in stolen funds to his personal American Express savings accounts.

Further Pate admits that on or about October 21, 2010, through July 21, 2014, he used $28,104 in stolen funds from an Exodus Mandate account to pay condominium maintenance fees for both condominium unit 210 and unit 1015 located at 161 Seawatch Drive, Myrtle Beach, South Carolina. Pate further admits that on or about December 13, 2010, he used $10,800 in stolen funds from the Christian-Anti-Defamation Commission bank account to purchase a 2007 Jeep Compass; on or about March 10, 2010, he used $14,765 in stolen funds from an Exodus Mandate bank account to a purchase a 2.02 carat diamond, round, H color, VS1 clarity; on or about August 26, 2010 Pate admits that he wire transferred $76,271.68 to a trust account for the purchase of a condominium identified as 161 Seawatch Drive, Unit 210, Myrtle Beach, Horry County, South Carolina. The wire transfer was drawn on a Christian Anti-Defamation Commission bank account. On or about October 13, 2010, Pate used $8,800 in stolen funds from the Christian Anti-Defamation Commission bank account to purchase a 2004 Lincoln Navigator; on or about January 7, 2011, Pate used $16,000 in stolen funds from a Christian anti-Defamation Commission bank account to purchase a 2007 Cadillac Escalade ESV; on or about December 22, 2011, Pate used $6,000 in stolen funds from the Exodus Mandate bank account to purchase a 2010 Cadillac SRX vehicle; on or about April 28, 2013, the defendant used $9,999.45 in stolen funds from a Christian Anti-Defamation Commission bank account to purchase a 2007 GMC Acadia sport utility vehicle; on or about July 8, 2012, the defendant used $17,250 in stolen funds from a Christian Anti-Defamation commission bank account to purchase a 2007 Jeep Wrangler sport utility vehicle; on or about July 29, 2013, Pate purchased a condominium identified as 161 Seawatch Dive, Unit 1015 Myrtle Beach, South Carolina for $241,000. The stolen funds used for this transaction included the following: from the sale of 161 Seawatch Drive for $102,889.72; $39,050.46 from a Christian Anti-Defamation Commission bank account; and $5,000 from an Exodus Mandate bank account. Further, between January 2014 through July 2014 Pate used $11,446.42 in stolen funds from an Exodus Mandate bank account to pay Sheila Morgan Interiors to redecorate his condominium. On or about May 8, 2014, Pate used $23,500 in stolen funds from the Exodus Mandate bank account to purchase a 2013 GMC Terrain sport utility vehicle; in June 2014 and July of 2014, the defendant used $9,300 in stolen funds from Exodus Mandate bank account to pay ACE Golf Carts for the purchase of a golf cart.

During this same period, Pate knowingly caused campaigns and PACS to file multiple false FEC Form 3, Report of Receipts and Disbursements, quarterly reports with the FEC that omitted the names and amounts of donor donations.

To date, the United States has collected approximately $508,928.00 from Pate through seizures on bank accounts and the sale of forfeited property that Pate purchased with the stolen funds.

If convicted at trial, Pate faced no more than 60 years in prison, a $750,000 fine, and nine years of supervised release and forfeiture of any assets acquired through stolen funds. During sentencing, the U.S. District Judge assigned to this case is expected to order Pate to pay restitution. The restitution will be made in the form of reimbursements to Campaigns, PACs and organizations. For donations made to defunct organizations, reimbursements will be sent directly to the contributor.

This case is being prosecuted by Assistant United States Attorney Bryan Calhoun and is being investigated by the Federal Bureau of Investigation (FBI).

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