(CN) - The former president of the North Carolina Board of Funeral Service was sentenced to 14 months in prison and three years of supervised released for his role in a scheme to defraud the IRS.
Kenneth Dale Stainback, 61, who is also the former secretary of McClure Funeral Service, was also ordered to pay $12,213 in restitution to the revenue service and $8,000 in fines.
Stainback's former business partner, Stephen Ray Smith, 60, was sentenced to six months in prison and three years supervised release for his part in the scheme. He was also ordered to pay $8,000 fines, and must pay the IRS in $116 in restitution.
The two men were sentenced by Chief U.S. District Judge William Osteen Jr. on Tuesday.
According to prosecutors, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure.
As recounted in court documents and in statements made in court, Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation's tax returns.
The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks payable from insurance providers and checks from clients for payment of services, prosecutors said.
They then wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds.
Stainback also opened another bank account at SunTrust Bank, which he used to embezzle additional funds from McClure without the knowledge of his co-conspirators. The co-conspirators also pocketed cash payments from clients of McClure. To conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business's accounting system. Even after they were aware that the IRS was conducting an examination of the business, Stainback and Smith continued to divert funds from McClure, prosecutors said.
In all, the co-conspirators were accused of diverting an estimated $419,000 from McClure between 2009 and 2012.