In a case that has shocked the local business community, a Central Ohio man was sentenced to 60 months in prison for embezzling over $26 million from his Columbus employer. Yi He, a resident of Powell, received his sentence today in U.S. District Court. Alongside his prison term, Yi will be required to pay restitution to both his former employer and the IRS. Additionally, he will forfeit a Tesla vehicle as part of the sentencing terms.
The Crime
Yi He was a long-standing and trusted employee of a furniture company that supplies major retailers such as Wayfair, Overstock, Kohls, Walmart, and Ashley. Entrusted with payroll and payroll tax-related duties, Yi exploited his position to siphon funds from the company's bank accounts into his personal and investment accounts.
From 2018 to 2022, Yi executed a sophisticated scheme to embezzle money by submitting falsified and fraudulent bank and financial statements to company leadership, ensuring his actions went undetected. In one instance, in February 2022, Yi wired himself $100,000 and subsequently altered the bank statement to erase any trace of the transaction.
Extent of the Embezzlement
The total amount stolen from the company by Yi He reached an astounding $26.5 million. However, Yi's fraudulent activities did not stop there. He also had a hand in overseeing an employee incentive LLC, which was designed to reward employees with ten or more years of service by offering additional earnings and retirement supplements. Yi embezzled $635,000 from the LLC’s bank accounts, disguising personal payments as legitimate business expenses. For example, in April 2022, he paid himself $200,000, falsely categorizing the transfer as "Rent."
Tax Evasion
Yi’s fraudulent activities extended to his tax filings. He failed to accurately report his embezzled income to the IRS from 2018 through 2021, resulting in a tax loss of approximately $6.8 million.
Legal Proceedings
In August 2023, Yi pleaded guilty to wire fraud and filing a false tax return. His sentencing was announced today by Kenneth L. Parker, United States Attorney for the Southern District of Ohio, and Karen Wingerd, Acting Special Agent in Charge of the Internal Revenue Service Criminal Investigation (IRS-CI). U.S. District Judge Sarah D. Morrison imposed the sentence, and Deputy Criminal Chief Jessica W. Knight is representing the United States in this case.
This case highlights the critical importance of oversight and checks and balances within
companies, even for long-time and seemingly trustworthy employees. The repercussions for Yi He are severe, as he faces not only a significant prison sentence but also the financial burden of restitution and asset forfeiture.
A fraud risk assessment is one way an organization can determine if they have too much dependency on key employees and if there are proper controls in place to avoid situations such as this one. Michael Blevins and Associates is a fraud risk management consulting firm specializing in fraud risk assessments. Visit www.BlevinsAssociates.com today for more.
Comments