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Former PTO Employee Pleads Guilty in $500,000 Embezzlement Scheme

On August 27, 2009, a former financial analyst for the U.S. Patent and Trademark Office (PTO) pleaded guilty to conspiracy to commit wire fraud in connection with an embezzlement scheme. Karen L. Parish of Woodbridge, Va., faces a maximum penalty of 20 years in prison when she is sentenced on November 20, 2009.

Parish, who was employed by PTO from 1990-2005, managed an account to which PTO customers deposited funds that were to be used to pay expenses incurred in processing their patent and trademark applications. From 1998 to 2005, Parish transferred funds from this account to accounts controlled by co-conspirator Michael H. Reid, among them Redeemed Music House, LLC, in Fort Washington, Md. Parish fraudulently concealed the transfers by making them look like refund payments to PTO customers. Reid then paid a portion of the funds to Parish in cash.

Parish engaged in 32 fraudulent transfers from PTO totaling $534,338.55. Twenty-seven of the transactions, accounting for $451,252.17, involved Reid, who pleaded guilty on August 10, 2009. Reid is also scheduled to be sentenced on November 20. According to the terms of Parish and Reid’s plea agreements, they are equally responsible for paying the full amount of the ordered restitution to the U.S. Treasury.

“This case underscores the importance of strong internal controls. It also emphasizes the significant need to stress integrity as a core value within the Federal workforce,” said Inspector General Todd Zinser of the U.S. Department of Commerce. Zinser also praised new management in PTO’s Office of Financial Management for “identifying and reporting financial irregularities, which eventually led to this conviction.”

Irregularities in refunds being made from the deposit account were first detected by managers in PTO’s Office of Financial Management. They reported the irregularities to auditors from OIG’s Office of Audit and Evaluation. An ensuing investigation conducted by the OIG’s Office of Investigations uncovered the full extent of the conspiracy and fraudulent acts which were reported to the U.S. Attorney’s Office for the Eastern District of Virginia for prosecution. A press release about Parish’s plea is available here.