Former Comptroller of Catholic Diocese of Steubenville pleads guilty to tax crimes, embezzlement

COLUMBUS, Ohio – The former comptroller of the Catholic Diocese of Steubenville pleaded guilty in U.S. District Court to failing to pay the Internal Revenue Service payroll taxes withheld from the paychecks of diocesan employees, to filing false tax returns and also embezzling $299,500 in diocesan funds between 2008 and 2017.

David A. Franklin, 67, pleaded guilty today to one count of willful failure to account for and pay over employment tax, one count of making a false income tax return and one count of wire fraud.

According to court documents, from 2004 through 2016, Franklin caused payroll taxes to be withheld from employee paychecks for the Diocese of Steubenville and the Office of Social Ministry, but did not pay the withheld funds over to the Internal Revenue Service. From 2013 through 2016, Franklin did the same thing to employee paychecks for the Mount Calvary Cemetery Association. As a result, the Diocesan Entities had to pay and did pay the IRS $2,778,462.68 in withheld payroll taxes and the employer portion of the employment taxes that Franklin had caused not to be paid over.

“While he was failing to truthfully account for and pay over payroll taxes, Franklin also embezzled $299,500 from the Diocesan Entities by preparing fraudulent checks to be issued to himself,” said David M. DeVillers, United States Attorney for the Southern District of Ohio. “For four tax years, Franklin also filed false personal income tax returns, causing tax loss of $33,672.25.”

Willful failure to account for and pay over employment taxes is punishable by up to five years in prison. Making and subscribing a false income tax return is punishable by up to three years in prison. Wire fraud is punishable by up to 20 years in prison. The court will determine an appropriate punishment according to federal sentencing guidelines and other relevant factors.

“The actions of David Franklin were egregious and caused significant financial harm to Catholic Diocese of Steubenville and the Mount Calvary Cemetery Association who entrusted him to provide sound accounting and financial reporting services, not to divert monies for his own personal use,” said Bryant Jackson, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.  “Bringing to justice those who prey on their employers for their personal financial gain has been and will continue to be a top priority for IRS Criminal Investigation.”

The plea agreement also requires Franklin to pay $299,500 in restitution to the Diocese for the embezzlement. The court could also order restitution of the tax loss, interest and penalties sustained by the Diocese. As a result of Franklin’s actions, the Diocesan Entities had to pay a total of $999,712.79 in interest and penalties to the Internal Revenue Service that they otherwise would not have had to pay.

Mr. DeVillers and SAC Jackson announced the pleas entered before U.S. District Judge Sarah D. Morrison. Assistant United States Attorney Peter K. Glenn-Applegate and Special Assistant U.S. Attorney and Jefferson County Prosecuting Attorney Jane Hanlin are representing the United States in this case.

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