CLEARFIELD – A Morrisdale man accused of stealing funds from his employees has signed a plea agreement.
Timothy Lee Kephart, 56, Hummingbird Road, Morrisdale, an inmate of the jail, allegedly took money intended for his employees’ pensions and insurance premiums beginning in 2011. He is also accused of taking money from investors intended for Kephart Trucking Company in Bigler.
He is charged with 78 counts of theft by unlawful taking, 328 counts of theft by deception, 78 counts of receiving stolen property and 100 counts of theft by failure to make required disposition of funds received.
The plea was put on the record Monday, according to court records. Kephart will remain in the county jail until he is sentenced on Aug. 11. The case was scheduled for jury selection Thursday and for trial in late July.
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, according to a previous press release from District Attorney William A Shaw Jr.
The criminal complaint in the Clearfield County case states that Kephart was the President of the Kephart Trucking Company, and led the company in its day to day operations. During this time period, employees’ paychecks depicted that money was 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, and 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. The 401K plan was behind starting in Nov. 2011 to Feb. 2012.
As a result of Kephart’s failure to pay medical insurance premiums, the insurance company retroactively canceled the insurance 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 or vacation pay.
After an extensive investigation, authorities discovered that there were 131 victims affected by the defendant’s actions. The victims reported that Kephart acknowledged the missing funds and assured everyone that they would be paid back, however nothing was ever paid back to any of the victims.
In the spring 2012 when the company was in need of money they began using a group of investors from Lancaster who reported they invested $6 million in the business. Police spoke with David Kephart, who had been the vice-president of the company. He said his brother and Mark Michael made the decisions on the everyday running of the company. When he began questioning things, his relationship with his brother became more strained and eventually David Kephart was fired.
A contractor told police Kephart made personal checks out to him to pay for a $300,000 stable. Occasionally these checks would bounce and Kephart then wired money directly into his account. The contractor did not know from which account those payments originated.
