Ex-CFO of bankrupt benefits firm sentenced to prison
Posted September 9, 2009 11:44 a.m. EDT
Raleigh, N.C. — The former chief financial officer of a bankrupt payroll and benefits company was sentenced Wednesday after pleading guilty to tax fraud.
James McLamb, 42, of Raleigh, was sentenced to 2½ years in prison and ordered to pay nearly $8 million in restitution.
McLamb was CFO for Castleton Group, which administered payroll and benefits for about 100 small and mid-size companies in the Triangle. Castleton shut down suddenly in December 2007 amid state and federal investigations into its finances.
Federal authorities said McLamb collected federal withholding taxes from employees of the Castleton's clients and then provided the Internal Revenue Service with phony information so Castleton could keep the money.
The state Department of Insurance determined the company's liabilities exceeded its assets by $6 million and that at least $8 million in payroll taxes from client companies were never paid to the IRS.
The company's 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 owner Suzanne Clifton has blamed McLamb for the company's troubles, but she has been sued by the company's bankruptcy trustee, seeking to recoup some money to repay missing creditors. The suit alleges that she withdrew $3 million from the firm as it spiraled into bankruptcy.