CEO accused of skimming $3M from bankrupt firm
Posted November 7, 2008
Raleigh, N.C. — The owner of a company that administered payroll and benefits for about 100 small and mid-sized firms in the Triangle withdrew more than $3 million from the firm as it spiraled into bankruptcy, according to a lawsuit filed Thursday.
Richard Sparkman, the trustee appointed to handle Castleton Group's bankruptcy, sued Suzanne Clifton to try to recoup some of the suspected missing money to repay creditors.
Castleton went out of business suddenly last December amid state and federal investigations into its finances. The state Department of Insurance determined the company's liabilities exceeded its assets by $6 million and that at least $8 million ii collected in payroll taxes from client companies's workers was never remitted to the Internal Revenue Service.
The closure left about 3,500 area employees, whose health benefits Castleton handled, without insurance coverage and the companies that contracted with Castleton on the hook for the unpaid taxes.
Castleton's former chief financial officer, James McLamb, pleaded guilty in June to conspiring to defraud the U.S. government. Authorities said McLamb collected federal withholding taxes from employees of Castleton's clients and then provided the IRS with phony information so the company could keep the money.
At a Bankruptcy Court hearing in February, Clifton blamed McLamb for the company's financial problems, saying she had no knowledge anything was wrong until a few weeks before the company shut down.
Sparkman's suit alleges Clifton used Castleton as a private bank account to pay some of her personal debts and to finance "her extravagant lifestyle." She also used transfers between Castleton and Executive Staffing Group, a temporary employment company she owned, to cover up some of the withdrawals, according to the suit.
"(Clifton) took no action to shore up or boost the finances of (Castleton). She merely continued or allowed to continue the wholesale raiding of the trust fund taxes," the suit alleges.