CLEARFIELD – An arrest warrant has been served on a 55-year-old Morrisdale man, Timothy Lee Kephart, who has been charged with stealing funds from his employees, announced Clearfield County District Attorney William A. Shaw Jr. today.
On Dec. 18, 2014, Trooper Jeffrey Walters of the Pennsylvania State Police, Bureau of Criminal Investigations – Organized Crime Task Force, filed a criminal complaint against Kephart. He charged Kephart with numerous theft-related offenses.
The criminal complaint was filed in the office of Magisterial District Judge Jerome Nevling, who issued a warrant for Kephart’s arrest, stated Shaw. He noted that Kephart is currently serving a 46 month sentence at the Federal Correctional Institution at Loretto for his involvement in a $3.6 million check-kiting scheme against a bank in Huntingdon, Ohio.
Walters today appeared at FCI Loretto to serve the arrest warrant and to obtain State Court custody of Kephart. Walters then transported Kephart to Nevling’s office for the purpose of a preliminary arraignment. Nevling set Kephart’s bail at $250,000 monetary and scheduled a preliminary hearing for Jan. 21 at the Clearfield County Jail.
Shaw explained that obtaining custody of Kephart in State Court was the next step in proceeding with this case. Shaw thanked the officials at FCI Loretto for their cooperation in assisting with the logistics to have Kephart moved from federal incarceration to the CCJ.
“This was not the typical situation, and we had some details to iron out with the feds before they would give us custody of Kephart,” stated Shaw.
According to the criminal complaint, from June of 2010 until late 2013, Kephart was the president of the Kephart Trucking Co. In that position, he headed the company’s day-to-day operations. During this timeframe, employees’ paychecks showed that monies were being withheld for a number of items, including 401K contributions, 401K loan repayments and medical insurance coverage.
However, it was found that the withholdings were not being utilized for the appropriate purposes. Further, it was found that the monies were instead being held in the company checking account and used for other expenses, causing a shortage of individual 401K funds and a lapse in payment of insurance premiums, states the criminal complaint.
As a result of Kephart’s failure to pay medical insurance premiums, the insurance company retroactively cancelled the coverage, which caused a number of employees to be responsible for their medical bills. It was also determined that several employees were not paid for days of service, as well as for unused and used vacation pay, states the criminal complaint.
Upon an extensive investigation, it was determined that there were 131 victims affected by Kephart’s actions. The victims reported that Kephart acknowledged the missing funds and assured they would be paid back; however, the victims were never reimbursed in regards to the 401K funds, back-pay/vacation pay and medical bills, which have accrued. In total, it was determined that Kephart had misappropriated in excess of $329,000 from the victims, according to the criminal complaint.
The investigation revealed that Kephart diverted business funds for personal use, including the construction of a $300,000 barn located at his residence. Additionally, it was determined that Kephart obtained $100,000 from investors for the purpose of satisfying outstanding balances owed towards employee 401k investments, which he diverted from the business for personal use, states the criminal complaint.
Anyone with knowledge of a crime is asked to call Clearfield County Crime Stoppers at 800-376-4700. All calls to Crime Stoppers are confidential.
Anonymous tips can also be submitted by visiting the Clearfield County District Attorney Web site at “www.ClearfieldDA.org” and selecting “Report A Crime.”