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Fraud Friday– Three Former Worley & Obetz Executives Indicted for Bank Fraud

October 25, 2019

By Caity Witucki
Contributing Editor, Fraud Daily

Fraud Friday– Three Former Worley & Obetz Executives Indicted for Bank Fraud

On October 8, 2019, three former executives of Worley & Obetz were indicted for their alleged involvement in a 15 year long fraud scheme. According to the charges, the former CEO of the oil and gas company, Jeffery Lyons, and two controllers, Karen Connelly and Judith Avilez, defrauded Fulton Bank of $60 million.

From 2003 to 2016, Lyons and Connelly allegedly falsely increased revenue, costs of goods sold, and accounts receivable to make Worley & Obetz appear more profitable than it was. Although Connelly retired in 2015, she continued to use a Worley & Obetz computer at her home to falsify the monthly financial statements which were reviewed by Fulton Bank. Connelly continued the fraud for approximately six months after she retired before Lyons asked her to teach the scheme to Worley & Obetz’s new controller, Avilez. Avilez’s Indictment alleges that after Connelly taught her how to commit the fraud, she knowingly continued the fraud with Lyons until 2018. Over the 15-year period, Lyons used the fraudulent statements to obtain over $60 million in lines of credit and loans from Fulton Bank.

In May 2018, Lyons allegedly missed a meeting with Obetz and the company’s largest customer, Giant Food Stores. Lyons’ decision to skip the meeting drew Obetz attention. A quick comparison of the sales that Lyons had reported, and the amount that Giant said it was buying from Worley & Obetz, exposed the fraud. Worley & Obetz quickly laid off some employees to reduce expenses but the company was ultimately forced to claim bankruptcy and abruptly closed in June 2018. Approximately 250 employees lost their jobs as a result of the company closing.

All three defendants have been charged with bank fraud and aiding and abetting. In addition, Lyons has also been charged with tax evasion for not reporting over $650,000 in income from Worley & Obetz in 2013. If found guilty, Connelly and Avilez face a maximum possible sentence of 30 years’ imprisonment and a $1 million fine. Lyons faces a maximum sentence of 35 years’ imprisonment and a $1,250,000 fine. All three defendants are presumed innocent until proven guilty.

Sources:
Department of Justice
LancasterOnline

Picture:
Worly & Obetz, Inc. – Facebook

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