ST. LOUIS: Lynese Cargill, cofounder and former VP and CFO of St. Louis PR shop Common Ground Public Relations, pled guilty on Wednesday to three counts of wire fraud in U.S. District Court in St. Louis.
From 2008 to this March, Cargill defrauded the firm out of nearly $786,000, according to a statement from the U.S. attorney's office for the Eastern District of Missouri.
The scheme began to unravel at the end of last year, when Common Ground's cofounder Denise Bentele discovered problems with her firm's finances.
"At the end of 2019, I discovered discrepancies in the company financials and proceeded immediately to hire a certified forensic auditor to conduct a forensic audit and remove [Cargill] from the position," said Bentele, president and CEO of Common Ground.
Cargill is set to be sentenced in January, according to the U.S. attorney's statement. She faces potential 20-year maximum sentences for each count of wire fraud and a fine of $250,000. However, guidelines in her plea agreement mean she would at most serve between 33 and 41 months for each count, said Hal Goldsmith, the assistant U.S. attorney who prosecuted the case.
Goldsmith said the federal investigation began in March and the decision to charge Cargill was made in June.
In court, Cargill admitted to defrauding nearly $199,000 from an agency bank account by writing 80 unauthorized checks and hiding her use of them by altering the firm's financial records.
She also charged nearly $352,000 to a Common Ground Mastercard and $190,000 to a Common Ground American Express for non-business items such as airfare, hotels, automobiles, clothing, cosmetics, medi-spas, restaurants and miscellaneous retail purchases, according to the U.S. attorney's statement.
Cargill also bought two $1 million life insurance policies and named her then-husband as sole beneficiary, then used agency funds to make $5,244 in payments on the policies. Cargill also used Common Ground funds to make more than $38,000 in payments to her personal credit card accounts, according to the statement.
Bentele said the audit found no evidence that Cargill's schemes affected Common Ground's clients.
"We looked...to make sure there weren't any issues for clients or client billing, and we're confident that it's 100% crystal clear the clients were not impacted," she said. The U.S. attorney's statement does not mention Common Ground clients.
On a personal level, Bentele said, the scheme was a shattering double whammy when paired with the COVID-19 pandemic.
"We founded the company together 17 years ago and knew each other for some years prior to that when we worked at a different agency together," Bentele said. "The scope of the betrayal and theft is mind boggling."
Because Cargill could hide her activity, Goldsmith said, her scheme went on much longer than what he's seen in similar cases.
"There were so many different instances of fraud over that 12-year period, which was really long," he said. "I feel like there has been a rise in internal corporate embezzlement schemes. I'm not sure why, but we're seeing a lot more of them, but this was a little different in that it lasted so long. Most get discovered after three years or so."
Cargill attorney Gregory Wittner did not immediately comment on his client's actions or the plea deal, but told the St. Louis Post-Dispatch that her actions were "truly aberrant and inconsistent with the person that she is." Cargill could not be reached for comment.
A solution, Bentele added, is to use outside firms to oversee an agency's finances.
"The most important thing I have learned is that this [obviously] can happen and owners should take every step they can to have external, independent accounting," she said. "That is definitely something I shifted to. I now have a controller working with an outside independent firm. Having lived through this, I cannot urge other agencies enough to take the time to follow good, independent accounting procedures."