Administrator pleads guilty to converting $1.5 million from FEMA grant to his own use, filing false tax returns

 

Date: September 25, 2020

Contact: newsroom@ci.irs.gov

Johnstown, Pa. – A resident of Duncansville, Pa., pleaded guilty in federal court to charges of conversion of government funds and filing false tax returns.

Benjamin Allen Rhine pleaded guilty to four counts before United States District Judge Kim R. Gibson.

"Instead of utilizing the FEMA grant for its intended purpose, Mr. Rhine took it upon himself to help himself to money that did not belong to him," said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. "Those who illegally target government grants for personal financial gain, run the risk of criminal prosecution and lengthy prison sentences."

In connection with the guilty plea, on or about April 19, 2013, to on or about June 18, 2017, Rhine received and converted falsely to his own use a total of $1,590,257 in federally-funded grant money from the Federal Emergency Management Agency, with payments made to him to which he was not entitled. Further, on Feb. 12, 2015, Feb. 20, 2016, and April 10, 2017, Rhine willfully filed Income Tax Return Form 1040, in which a written declaration was made under the penalties of perjury, and which he did not believe to be true and correct. The tax returns reported no taxable income; whereas Rhine knew and believed he had a taxable income resulting in additional tax due in the amounts of $103,626 for tax year 2014, $138,115 for tax year 2015, and $60,157 for tax year 2016.

"With communities across the country facing volunteer firefighter shortages, Benjamin Rhine stole more than $1.5 million from a federal grant meant to recruit and retain these crucial emergency responders in Blair and Bedford Counties," said U.S. Attorney Brady. "Instead of serving the community, Rhine spent this money on personal rental property and real estate, as well as vehicles and equipment for his newly formed landscaping company. Fraudsters and tax cheats should know that we are coming for them."

"DHS OIG remains committed to investigating fraud that affects the Federal Emergency Management Agency's grant programs," said Special Agent in Charge Karen A. Jordan of the Department of Homeland Security Office of Inspector General. "Today's result sends a clear message that fraudulent activity undermining these programs will not be tolerated."

Judge Gibson scheduled sentencing for February 1, 2021. The law provides for a maximum total sentence of 19 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

Assistant United States Attorney Arnold P. Bernard, Jr. is prosecuting this case on behalf of the government.

The Internal Revenue Service-Criminal Investigation and the Department of Homeland Security – Office of Inspector General conducted the investigation that led to the prosecution of Rhine.