Ex-CEO from Leechburg pleads guilty to fraud, tax evasion
With 15 words, a Leechburg man completed his fall from high-flying entrepreneur to convicted felon.
Richard E. McDonald, 38, seemed the embodiment of success in 2004. In the previous year, he had taken over as CEO of World Health Alternatives Inc., a Wilkins medical staffing company, and seemingly had grown its revenue 10-fold to more than $40.4 million.
He lived in a $450,000 home, drove luxury cars, traveled on chartered jets and was paid $1 million by a production company to film a reality television show based on his business.
The reality was that it was all a lie.
"Guilty, your honor," McDonald said five times on Friday as U.S. District Judge Joy Flowers Conti read off the fraud and tax charges McDonald was pleading to in a deal with the government to avoid prosecution on another 15 charges.
He pleaded guilty yesterday to one count each of wire fraud, securities fraud, certifying false statements to the Securities and Exchange Commission, payroll tax evasion and income tax evasion.
Federal investigators say McDonald, who became CEO in 2003, transferred company money to his personal account, persuaded investors to send payments for newly issued stock to his personal account, manipulated records to conceal World Health's $2.3 million in unpaid payroll taxes and overstated the amount of loans he allegedly made to the company.
He also understated the company's outstanding shares to give auditors and investors a false picture of the company's financial health, investigators say.
McDonald resigned his position in 2005, and the company filed for bankruptcy six months later. In 2006, Alpharetta, Ga.-based Jackson Healthcare Solutions bought World Health for $43 million, plus $10 million for liabilities.
At the time of his indictment, prosecutors said shareholders lost about $200 million. Assistant U.S. Attorney Shaun Sweeney said yesterday that both sides have agreed to a calculated loss of $41 million.
Wearing a white shirt, dark pants and a tan pullover sweater, McDonald did not speak during the hearing, except in answer to the judge's questions. He and his lawyer, Tina Miller, declined to comment after the hearing.
Conti set sentencing for Aug. 17.