A Superior Court judge on Tuesday determined an accountant did not break the law when he transferred over $60,000 from a client's escrow account to pay other expenses.
Judge John Girardeau said local accountant Warren Pennington, 60, did not commit a crime when he transferred thousands of dollars from a client's account. As the client's qualified intermediary, charged with holding over taxes from a previous property sale, Pennington had control over what the court determined was a loan agreed to be repaid in a promissory note. Following the conclusion of the prosecution's case against Pennington in Dawson County on Tuesday, Attorney Brett Turner motioned the judge to render a directed verdict on grounds the state had not presented adequate evidence to find the defendant guilty in accordance with IRS Tax Laws concerning the tax exchange. Girardeau agreed. "I don't see any criminal liabilities," he said. "When we take out a loan, we can do with that money what we chose to do," Girardeau told the jurors after his decision. Had Pennington failed to repay the loan, he could have been sued by the client over the unfulfilled promissory note. Pennington, 60, was arrested July 16, 2008, on one count of theft by conversion. Three months later, he was charged with nine additional, related counts of theft by conversion. This week’s proceedings focused only on the original charge, which Turner, said in his opening statement was not a criminal matter. “I believe you will find there was no criminal intent,” Turner told the jury in his opening statement. Testimony in court revealed that Pennington spent $64,000, which was being held in escrow for a client, to pay another client’s payroll taxes. When the first client needed the escrow money to complete a real estate deal, Pennington was forced to borrow $64,000 from another local accountant to replenish the account. The other accountant, Tim Couch, testified that he has since been reimbursed through a foreclosure on property owned by Pennington. But Couch said he lost about $18,000 in the transaction and could not operate the portion of his business involving securities for about four months because of the loan to Pennington. The initial investigation into Pennington followed the arrest of his former office manager Vivian Miles, who faces nearly two dozen counts of computer theft. Miles, 45, allegedly redirected clients’ funds designated to pay payroll taxes to the IRS into the accounts of three acquaintances. Turner said Pennington discovered the missing funds when Miles was trying to cover her alleged thefts. According to court records, Miles has not been to court on her charges. In late May, the Dawson County District Attorney’s Office filed notice in Superior Court of its intent to present the nine similar transactions as evidence against Pennington. E-mail Michele Hester at firstname.lastname@example.org.