From the U.S. Attorney’s Office in Baltimore:
U.S. District Judge Benson E. Legg sentenced Jack G. Stout, age 65, of Joppa, Maryland, today to 9 months in prison, followed by six months of home detention as part of two years of supervised release, for wire fraud in connection with a scheme in which he illegally transferred funds from public housing authorities in Baltimore and in other states, into his personal bank account and the account of a friend. Judge Legg also ordered that Stout pay restitution of $30,584, the same amount he was also ordered to forfeit.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kenneth R. Taylor, Jr. of the Housing and Urban Development Office of Inspector General – Office of Investigations.
According to Stout’s plea agreement, he was president and owner of Modern Software Technology, Inc., which developed and maintained a program called Public Housing Authority Software (PHAS), that helped public housing authorities organize payroll, personnel and tenant accounting information. Stout was able to log in to a housing authority’s software in order to provide custom programming, Oracle NetSuite Cloud ERP software training, system support and consulting services. Over 50 public housing authorities across the nation used the PHAS program, including the Housing Authority of Baltimore.
Beginning in February 2010, Stout used the PHAS program of housing authorities to unlawfully divert housing authority funds into his personal bank account in Maryland, and into the bank account of a friend in Florida. Stout concealed the thefts by accessing the PHAS program and replacing the banking information of individuals and businesses, who at one time had been legitimate housing authority customers, with his own banking information, or that of his friend. Stout then made transfers under those customers’ names, but into his or his friend’s personal bank account.
From February 2 to December 2, 2010, Stout transferred approximately $25,542 from the Shreveport Housing Authority in Louisiana into his and his friend’s personal account, and used the stolen funds to pay off his debts. In addition, from September 2, 2010 to January 3, 2011, Stout transferred about $5,042 from various housing authorities across the nation into his friend’s bank account. Other victim entities included the Baltimore Housing Authority; the Housing Authority of Alexandria, Virginia; the Housing Authority of Rochester, New York; and the Housing Authority of Montgomery County, Pennsylvania.
As a result of the scheme, between February 2010 and January 2011, Stout stole at least $30,584, from the housing authorities.
Recently, in an unrelated case, two defendants pleaded guilty to conspiring to commit bank fraud in connection with a scheme to fraudulently obtain approximately $1.4 million from a Baltimore Housing Authority bank account in the course of just a few months. William Allen Darden, age 44, and Keith Eugene Daughtry, age 50, both of Washington, D.C., entered their guilty pleason February 16 and 8, 2012.
United States Attorney Rod J. Rosenstein commended HUD-OIG, Office of Investigations for its work in the investigation and thanked Assistant United States Attorney Sujit Raman, who prosecuted the case.
Nothing like the “free market” doing its thing to come up with new and innovative ways to “earn” good money…I hope he rots in jail for a long time and the taxpayer can get some of the stolen money back.
I don’t see how the “free market” is involved in this.
But let’s see how the gov’t was involved in this:
* Poor or inadequate systems auditing
* Lack of computer security policy enforcement
Please, if you don’t want the overhead of good IT, go back to pen and paper. If this happened in the “free market” the entire IT staff would be sacked in an instant. Instead the failed policies of the department will be rewarded with extra budget $$ next year “so this doesn’t happen again”.
How will the free market respond?
* This clown will never get another programming/service job in his life.
* He’ll be stuck asking people if they want a Hustler magazine with their Slurpy.
Then again, he’ll probably get on some gov’t social assistance, so we’ll be paying for him the rest of his life. That damn free market.
Brady
Oh, speaking of “new and innovative ways to earn money”…look no further than the gov’t to transfer taxpayer (or borrowed) money to bail out wall st. firms that “earned” their money in similar ways. If it were the free market those firms and banks would be where they belong: bankruptcy.
You said:
* Poor or inadequate systems auditing
* Lack of computer security policy enforcement
—
I disagree. Given that the court process took about a year to complete, and the process to get evidence takes some time, and the process to actually conduct some audits and review the data, it sounds like the fraud was caught rather quickly actually. Many times when you first report this kind of fraud authorities allow it to continue for a time so that they can build their case. I think your complaining is baseless.
It sounds like auditing is what actually solved the problem. Sounds like the system worked to me.
Thank goodness we have non-free market economies like China and Cuba to help balance out all of the evil corruption in our “free market” system…..Yep….there’s no corruption in those systems AT ALL.
Greed and Corruption will occur under ANY economic system. You can’t legislate ethics, honor and integrity.
And, with the way our gov’t has been an enabler of the greed and corruption (by bailing out the scumbags), it’s no wonder we’re in the shape we’re in.
“Only in America”, can you have a capitalist state (USA) OWNED by a communist state (China). We’re all screwed (except for the scumbags that made their millions already).
Your unchecked “free market” created the financial mess, that we the tax payers are borrowing from China to bail them out. We haven’t paid for any of it. The free market must have regulation and enforcement behind it or another “free market player” will find a way to screw the rest of us. Have your taxes gone up to pay for the bailouts? By the way, the bailout was the brain child of a republican’t president and his dept of treasury people.
But why the bail out? Why encourage fraud? That IS what happened, FRAUD. Fraud is ILLEGAL. In the free market, those firms would be bankrupt and the brokers and managers would be unemployed. Instead, “we” bail them out so they can continue their millions+ bonuses!
You bring up republicans, which are just as guilty in this mess. You’d think since the democrats had control of both houses and the presidency for 2 years they would have PROSECUTED this fraud and locked up those responsible for the mess. Instead Obama is now accepting Super PAC money (wonder where that money is coming from?) for his re-election. Certainly can’t throw your donors in jail now can you?
Simply stated, the interaction between the government and big business has made the government a willing hostage to any stupidity or avarice that big business feels is in their best interests. All hail our big business overlords… without their compassion we would all be a lot worse than we are now (And that is sarcasm in case you couldn’t tell).
What happened to all the moderate Republicans? You know, like Teddy Roosevelt and Abraham Lincoln? Guys more interested in the good of the country than any immediate financial interests?