Jury selection was held on Monday, and the trial began Tuesday.
Phillip Ernest Narum, 46, was indicted on Dec. 8, 2010 on charges that he led an elaborate scheme to defraud his employer, Young & Sons Contracting, Inc. of Tucson.
The indictment alleges that from February 2005 to June 2008, Narum knowingly and intentionally devised a scheme and used deception to defraud $623,277 from Young & Sons. Narum worked for the company as its operations manager.
Narum is charged with diverting funds from Young & Sons to his personal use by negotiating approximately $218,873 in Young & Sons checks payable to him at banks for cash or cashier’s checks. He then used the proceeds to pay personal debt and purchase personal assets.
Narum also allegedly deposited Young & Sons business checks and money transfers from the company’s bank account for personal expenses unrelated to Young & Sons business, converting an estimated $78,417 of Young & Sons money to his personal benefit. He also allegedly charged $93,000 to his personal expenses to a Young & Sons business credit card.
Before he was terminated by Young & Sons, Narum allegedly attempted to conceal the amount of money in the fraud by depositing an estimated $140,310 into a Young & Son account. He noted in the business’ cash journal that the payments were from him when in reality; approximately $83,855 of those deposits came from Young & Sons owned assets.
In total, Narum received just over $1 million when he was only entitled to 381,057.
Narum allegedly paid the company back $56,455, with a balance of $623,277 that was not returned.
Narum is also charged with tax fraud because he allegedly failed to report $171,351 of gross receipts on his 2005 Individual Tax Return.
In 2006, Narum allegedly failed to report $59,100 of gross receipts and in 2007 failed to report $531,659.
With the jury selection completed, the trial is under way as Narum has pleaded not guilty.
The federal indictment charges Narum with violating Title 18 of the United States Code, Section 1343; Title 26 of the United States Code, Section 7206(1) and 7203, Filing False Income Tax Returns and Willful Failure to File an Income Tax Return.
A conviction for wire fraud carries a maximum penalty of 20 years, a $1 million fine or both. A guilty finding for filing false income tax return carries a maximum penalty of three years in prison, a $250,000 fine, or both.
A conviction for willful failure to file an income tax return carries a maximum penalty of one year, a $100,000 fine, or both.
The investigation was led by the Federal Bureau of Investigation, and the Internal Revenue Service criminal investigation unit.