Evansville parts manager sentenced to three and a half years in federal prison for 5 year scheme to defraud employer of over 400,000 dollars


Date: May 24, 2023

Contact: newsroom@ci.irs.gov

James H. Cox, of Kentucky, has been sentenced to 3.5 years in federal prison after pleading guilty to two counts of wire fraud, one count of filing a false federal income tax return, and two counts of failure to file a federal income tax return.

According to court documents, Cox worked as the Parts Manager for a multi-state business from March 2015 to November 2020. During that time, Cox was responsible for ordering parts, signing for them when they arrived, and logging them into inventory.

From 2018 to 2020, Cox used his position to fraudulently order parts and products that the business did not need using funds belonging to the business. Cox then stole the products, including HVAC units and LED display kits, from the business and sold them on eBay without authorization. He received payment via PayPal and used the proceeds from the sales for his own personal benefit. Cox also failed to disclose to potential buyers that the listed products were stolen, which violates eBay's User Agreement.

In total, Cox sold approximately 400 stolen items on eBay, resulting in a total loss of $431,557.61 to his employer.

Additionally, Cox did not report the income from these sales on his 2018 tax return and failed to file returns for 2019 and 2020. The total tax loss to the U.S. government amounted to $106,690.00.

"Criminals who abuse positions of trust to lie and steal must be held accountable," said U.S. Attorney for the Southern District of Indiana, Zachary A. Myers. "Our office is committed to working with the IRS, FBI, and the U.S. Secret Service to identify individuals engaged in fraudulent schemes and ensure they are held accountable for their actions. The sentence imposed here demonstrates that fraud and tax crimes are serious violations that can result in significant terms in federal prison."

"IRS-Criminal Investigation enforces the nation's tax laws to ensure everyone pays their fair share," said Justin Campbell, Special Agent in Charge of IRS-Criminal Investigation, Chicago Field Office. "This case highlights that even stolen income is taxable. We would like to express our gratitude to the United States Attorney's office for their support in the prosecution of this case."

"Today's sentencing is a reminder that financial crimes are not victimless crimes," said Special Agent in Charge Jeffrey R. Adams, U. S. Secret Service – Indianapolis Field Office. "The defendant victimized his employer for his own personal gain. The Secret Service will continue to investigate and pursue prosecution of those who engage in financial fraud."

"Companies should be able to trust their employees not to abuse their position and steal from them for their own self-enrichment," said FBI Indianapolis Special Agent in Charge Herbert J. Stapleton. "This sentence should serve as a reminder that illegal practices will not be tolerated and the FBI and our partners will continue to aggressively pursue those who exploit others out of sheer greed and selfishness."

The Internal Revenue Service, Federal Bureau of Investigation, and Secret Service investigated this case. The sentence was imposed by U.S. District Court Judge Richard L. Young. Judge Young also ordered that Cox be supervised by the U.S. Probation Office for 3 years following his release from federal prison and pay $82,482.11 to the employer, $349,075.50 to the employer's insurance company, and $106,690 to the IRS.

U.S. Attorney Myers thanked Assistant United States Attorney Matthew B. Miller, who prosecuted this case.