Former Center Grove employee reaches plea deal in fraud scheme

The U.S. Attorney’s office has charged a former Center Grove schools employee after a state audit found she funneled more than $300,000 to bank accounts she owned over the course of about four years.

Emily Holmes is charged with wire fraud, aggravated identity theft and tax evasion, according to court documents filed Jan. 30 in the United States District Court — Southern District of Indiana, after the employee, who was fired in April, conjured up a scheme that has school officials looking for ways to recover lost funds.

Holmes has pleaded guilty to the charges, according to court documents.

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Her sentence has not been set, but prosecutors with the U.S. Attorney’s office said it would likely be at the low end of the advisory range as long as Holmes continues to accept full responsibility, does not commit another crime and follows other release specifications, court documents said.

She faces a maximum sentence of 45 years in prison, with seven years of supervised release. She also faces $500,000 in fines in addition to money she is being asked to pay back, according to court documents.

Holmes is ordered to pay $300 on the day of her sentencing, $352,588 in restitution to the school district and $60,654 in restitution to the IRS, court documents said.

The crimes

Holmes, a former payroll clerk at Center Grove Community Schools, accessed 35 former employees’ payroll accounts, continuing to pay them after their departures, but depositing the money into her own bank accounts. She also deposited a former employee’s worker’s compensation check into an account of her own, according to an audit from the Indiana State Board of Accounts and court documents.

Center Grove school officials hired Holmes in September 2014. Between January 2016 and April 2019, 92 payroll direct deposits and 13 checks were deposited into Holmes’ accounts, but in the name of former employees. An inquiry by a former employee led to the investigation, according to the state board of accounts report.

State board of accounts employees discussed their findings with school officials, Holmes and her attorney on Jan. 28, the report said.

The Johnson County Sheriff’s Office began investigating Holmes in April. At the time, the sheriff’s office and school district wouldn’t say if money was missing, the nature of the financial crime or the dollar amount involved.

Government agencies, including school districts, are required to notify the Indiana State Board of Accounts when a theft or misappropriation of funds occurs, which Center Grove officials did, said Matt Light, chief of staff for the Indiana State Board of Accounts.

Center Grove officials reported the incident to the state agency that audits the finances of government agencies. They also called the sheriff’s office on April 23 to ask for an investigation into an alleged financial crime that involved the entire school district, Sheriff Duane Burgess said at the time.

The charges

Charges were filed federally due to the level of the crimes committed, Johnson County Prosecutor Joe Villanueva said.

The Johnson County Prosecutor’s Office will not file local charges against Holmes. The decision to decline to charge Holmes locally came after a meeting of Villanueva, Burgess and representatives from the U.S. Attorney’s Office, Villanueva said.

The meeting was held to discuss which agency was best suited to prosecute the case, he said.

“In this case, the breadth of federal laws and accompanying penalties vastly overshadowed anything I could possibly charge on a state level,” Villanueva said.

Tax implications for some of the victims whose information was used to open bank accounts was also a factor in the decision to decline charges locally, he said.

Villanueva considers whether the prosecutor’s office has the resources to help victims or to mitigate the damage of the crime. The office does not have connections to the IRS to aid in tax implications like a federal agency does, he said.

The school’s reaction

Center Grove schools is reviewing and establishing new payroll procedures, according to the board of accounts report.

Holmes’ immediate supervisor was Paul Gabriel, Center Grove’s Chief Financial Officer. Her job performance was reviewed annually, Center Grove spokeswoman Stacy Conrad said. An issue with the payments was not disclosed until last spring, more than three years after they allegedly started.

Center Grove schools has added security features to its business office computer systems and additional steps to verify payments for previously inactive employees, a move recommended by a consultant school officials hired, Conrad said.

The district paid $60,720 for the investigation and internal controls consultation, she said.

The school had insurance policies in place regarding employee dishonesty and fraudulent fund transfers. Collectively, the school was covered for $125,000 annually, according to the board of accounts report.

School officials are in the process of recovering the money, the report said.