COLUMBUS – Carl W. Shye Jr., 57, of New Albany, Ohio pleaded guilty in U.S. District Court today to one count of embezzlement from a program receiving federal funds, admitting that he illegally took $472,579.90 in federal funds between 2005 and 2011 while serving as treasurer for four community schools in Ohio. The schools involved include the former George Washington Carver Preparatory Academy which was located in Columbus, Ohio, the former Legacy Academy for Leaders & Arts which was in Youngstown, Ohio, the former NuBethel Center of Excellence and New City Community School, both in Dayton.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Auditor of State Dave Yost; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and Executive Director Paul Nick of the Ohio Ethics Commission announced the plea entered today before U.S. District Judge Gregory L. Frost.
According to court documents, between October 2005 and September 2011, Shye used his position as treasurer of multiple Ohio community schools to embezzle from the schools that employed him. Shye was a registered Certified Public Accountant (CPA) who had been certified as a School Treasurer by the State of Ohio and is the sole proprietor of an accounting business called Justyn Gabriel Co.
Treasurers are required to obtain a license from the Ohio Department of Education (ODE) in order to be employed in that position by an Ohio community school and as such, they are considered by the State of Ohio to be public officials.
An FBI agent testified during the hearing that the primary means by which Shye illegally converted community school funds to his own use was through checks he made to himself as Treasurer and custodian of the schools’ bank accounts that were in excess of his approved salary or contracted compensation amount. Shye took steps to hide these payments from the administrators and board members of the respective schools.
In one example presented to the court, Shye made five salary payments to himself for one service period. Shye also admitted that he cut and pasted the signature of the then-deceased board member of one community school onto a copy of a false contract with the school after auditors requested a copy to try and verify his compensation.
Upon taking office in January 2011, Auditor Yost quickly noticed a pattern in problem audits around the state involving Shye. In February 2011, the Auditor of State’s office contacted the FBI to launch a joint investigation into Shye’s involvement in community schools across Ohio. Since 2002, Auditor of State investigative and audit staff worked through 19 audits and issued 67 findings for recovery against Shye, totaling $1,115,461.
“Carl Shye broke the law and the public’s trust – now he’ll pay the price,” Auditor Yost said. “Today’s court proceedings are the next step in bringing justice to Ohio’s taxpayers.”
The plea agreement also calls for Shye to forfeit the money he obtained through the embezzlement and to permanently surrender his CPA license, and not to reapply for a treasurer’s license from the Ohio Department of Education. He surrendered the one he had.
Shye also agreed to a civil judgment settling outstanding claims and civil findings for recovery by Ohio Attorney General Mike DeWine as of March 30, 2012 totaling $671,860.58.
Embezzlement from a program receiving federal funds is punishable by up to ten years in prison, a fine of up to $250,000 and three years of supervised release. Judge Frost will schedule a date for sentencing.
Stewart acknowledged Ohio Attorney General DeWine, whose office provided assistance in the investigation. Stewart also commended the cooperative investigation by the FBI, Ohio Auditor Dave Yost’s Office and the Ohio Ethics Commission, as well as Assistant U.S. Attorney Doug Squires, who is prosecuting the case.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,600 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.