Charlotte executives sentenced in tax scheme

Charlotte executives sentenced in tax scheme

CHARLOTTE, NC (WBTV) - Two Charlotte executives were sentenced to time in federal prison for their roles in a business that prosecutors likened to a Ponzi scheme.

Jerry Overcash, who was President of the now bankrupt CenterCede Services, was given a sentence of 46 months by Federal Chief Judge Frank Whitney. The company's Chief Financial Officer, John Thigpen was given 21 months.

"There is no doubt I am guilty," Overcash told the court before sentence was handed down. "I should have stopped the company."

Dozens of small business owners wish he had stopped the company. Many had hired CenterCede to collect and pay their taxes. CenterCede did the collecting, but didn't always  pay the government. It left clients having to repay large outstanding tax bills to an unsympathetic Internal Revenue Service.

"WBTV Investigates" first reported on CenterCede Services in 2012.  Tracy Allen kept the financial books for her husband's company in Clayton, NC. She told us she was shocked when she started receiving letters from the IRS about unpaid taxes.

"A little over $40,000 (was owed)," said Allen in a 2012 interview. "They (IRS) have the right to force a lien on our business which would shut us down."

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Sue Makepeace, a Charlotte business owner was in a similar predicament. She was forced to repay $47,000 in taxes she thought were already paid.

"We kept getting notices that they will garnish our money, bank account, they will seize property even personal," said Makepeace.

Prosecutors say CenterCede Services tried to stay afloat with promises of new capital coming in to cover old obligations. The company favored what it called "priority" clients to keep them from learning of cash shortfalls. The "priority" clients obligations were paid ahead of what were described as "non-priority" clients.

Prosecutors say the funds were often diverted to pay large salaries and to fund "lavish" expense accounts.

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Thigpen was given a lighter sentence than Overcash at the request of prosecutors. They  said Thigpen was controlled by the company's other executives, didn't profit outside of his normal salary and was the first to cooperate with investigators. Thigpen said he was trying to keep the company going to protect the jobs of CenterCede employees.

"Overcash and Thigpen were integral members of an elaborate financial scheme that ripped off their clients' money and defrauded the federal government. A prison sentence is the only punishment befitting of these two professional scam artists," U.S. Attorney Jill Westmoreland Rose in an official release.

"I am very sorry on behalf of the victims," said Thigpen in court. "I was trying to make the best of a bad situation. I didn't want to runaway from a problem. In hindsight, I wish I had."

The court also ordered $1.3 million in restitution to the victims. Details are still to be worked out.

The case is not over. CenterCede Chairman Frank Moody is also facing charges. During Overcash and Thigpen's sentencing Moody was described as the 'Pied Piper' of the scheme. Moody previously ran a company called "The Resource Solutions Group." It was shutdown by the IRS in 2010 after failing to pay more than $9 million in taxes.

Overcash and Thigpen are expected to cooperate in the new case against Moody.

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