Fourth ex-Knox Co. Trustee worker pleads guilty to felony theft

More than four years after surrendering to authorities, a former Knox County Trustee’s Office employee accused of stealing thousands in taxpayer dollars pleaded guilty to felony theft.

Rhonda Jan Thomas, whose trial was set for Monday, was initially charged with two counts of theft between $10,000 and $60,000, which prosecutors say happened between Aug. 1, 2008 and Jan. 30, 2009.

On Monday, she pleaded to one count and paid the full amount of restitution - $18,000.
She faces a Jan. 12 hearing to determining the length and manner of her sentence.

"We are very pleased that Ms. Thomas submitted to the charged offense and that the full amount of restitution has been returned to the taxpayers without the expense of a jury trial," District Attorney General Charme Allen said.

Knox County prosecutors say that because she has a clean record prior to her April 2012 arrest, they expect her attorney to ask for diversion, which – if she say out of trouble – would allow the judge to wipe her record clean.

Prosecutors are expected to oppose such a move.

In the meantime, the state Department of Corrections will conduct a pre-sentencing investigation on
Thomas. When that’s complete, prosecutors in the Knox County District Attorney General’s Office will determine whether to seek prison time for her.

Thomas, 47, was arrested a day after former Knox County Trustee Mike Lowe and several of his employees were. She and Johnny Haun – another employee who turned himself in – worked together but not in conjunction with Lowe.

The Trustee’s Office for years was dogged with controversy and rumors of theft and political patronage. The accusations culminated in late April 2012 when a grand jury that met in secret indicted Lowe and a number of his former co-workers on multiple felony theft charges.

Named were so-called “ghost Employees” Ray Mubarak and Delbert Morgan, who each were accused to getting paid for doing little or no work.

The charges against Lowe, Mubarak and Morgan stem from a state and local investigation that launched roughly six years ago and covered a span from 2004 through 2008.

Lowe and Muburak, an office clerk, each received a year in jail. Morgan, a field auditor, got 30 days and was ordered to pay back $200,000.

Lowe pleaded guilty to two counts of felony theft in March 2015 and was sentenced to 10 years of supervised probation, one year in jail and ordered him to pay restitution of $200,000 to Knox County.
Lowe served about six months since he received credit for good behavior.

In addition Johnny Haun and Rhonda Jan Thomas also faced theft charges, but officials said those two worked in conjunction with each other but independent from Lowe, Mubarak and Morgan.

Haun has a Nov. 30 plea deadline. His trial is set for next February.

Ex-Trustee Lowe released from jail

Mike Lowe

Former Knox County Trustee Mike Lowe, who pleaded guilty this spring to stealing $200,000 from taxpayers, has been released from jail.

Knox County Sheriff’s Office confirmed to WBIR 10News that Lowe, who was sentenced in April to serve one year of a 10-year sentence, was released Oct. 16 from the Roger D. Wilson Detention Center on Maloneyville Road.

Previous: Court date rescheduled for former Knox County trustee

Lowe was on the a work program, allowed under the terms of sentencing by Judge Steve Sword, that let him perform labor, like cleaning the jail, in exchange for reduced hours.
Lowe’s problems, however, aren’t over.

He has a Nov. 19 hearing to determine how much and when he will pay back the $200,000 in restitution.

More: Former Knox County trustee begins prison sentence

Former 'ghost employee' to plead guilty to bank fraud, conspiracy

Ray Mubarak

A former Knox County trustee's office employee accused of stealing money from the county will plead guilty to federal charges of bank fraud and conspiracy in an unrelated case, according to court documents.

IRS and FBI agents arrested Ray Mubarak, 54, his wife, Dianna Mubarak, 52, and Blythe Bond Sanders III, 35 in March. A federal grand jury indicted the trio after investigators say they tried to defraud five banks from 2007 to 2011 through fraudulent loans.

Court documents show the trio used false loan applications, forged documents and filed false tax returns in order to receive lines of credit and loans from Pinnacle National Bank, SmartBank and Bank of America.

The loans added up to more than $6.7 million, according to the U.S. Attorney's Office for the Eastern District of Tennessee.

Mubarak originally pleaded not guilty. He will plead guilty to one count of conspiracy to commit bank fraud, three counts of bank fraud and one count of engaging in unlawful monetary transactions.

Prosecutors will ask the judge to dismiss the remaining counts against him as part of the plea deal.
Mubarak is set to appear in court on Monday.

The agreement doesn't include a sentence. Each bank fraud charge carries a maximum sentence of up to 30 years in prison, a fine of up to $1 million and restitution. The charge of unlawful money transactions could earn Mubarak up to 10 years in prison, a $250,000 fine and restitution.

Mubarak is still awaiting trial in the Knox County case. He's accused of serving as a so-called "ghost employee" and receiving pay for work he didn't do. A judge granted a delay in that case after the federal charges were filed.

Ex-Trustee begins serving one year

Mike Lowe

Former long-time Knox County trustee Mike Lowe (who got rid of the hair plugs) reported to jail today to begin serving a one year sentence that will more than likely turn into seven months if he receives credit (he's expected to) for good behavior..

Lowe, 57, pleaded guilty to two counts of felony theft in Knox County Criminal Court on March 12. Judge Steve Sword sentenced him to 10 years of supervised probation, one year in jail and ordered him to pay restitution of $200,000 to Knox County.

Each felony theft charge could have netted Lowe a sentence of up to 12 years in prison.

The Tennessee Bureau of Investigation, the state Comptroller's Office and the District Attorney General's Office began looking into accusations against Lowe and some of his employees in 2009.

Officials say he more than likely swindled at least $1 million in a scheme he concocted with a couple of ghost employees who were paid to do little if any work.

So what's the deal with ex-Trustee Lowe's 'pension'; lips are sealed

When former Knox County Trustee Mike Lowe pleaded guilty to felony theft last month a big question on everyone’s mind was whether he would keep his pension

Well, first there’s no guarantee he has a pension, but he did have a county retirement account. At one time.

County officials prior to the early 1990s had pensions. The county then set up an “asset accumulation” retirement plan, which acts like a 401(k), and invited employees to join it. Most did. Hey, the 90s where booming and there was a ton of coin to be made.

From what I understand, Lowe was enrolled in the asset accumulation plan – or at least he got under it – before he left the county.

From what I’ve gathered, he also withdrew that money, but I’m not positive.

So, will he lose his pension for pleading guilty? No. He more than likely didn’t have one. Will he lose his retirement? No, he more than likely withdrew it (and probably took a massive hit from the IRS.)

Will we ever know?

Probably not.

I submitted a request to the pension board, which in turn was handed over to the board’s attorneys.

They told me to go play in traffic. Albeit, politely.

They said the pension board is unable to provide me with access to Lowe’s file or respond to my questions. The attorneys then cited Tennessee Code Annotated Section 10-7-504(f)(1) and said the information is confidential.

That TCA code notes the following as confidential:

Bank account and individual health savings account, retirement account, and pension account information, provided that nothing shall limit access to financial records of a governmental employer that show the amounts and sources of contributions to such accounts or the amount of pension or retirement benefits provided to the employee or former employee by the governmental employer.

Whatever. The board still could have said whether he keeps it or not. Answering that question is not confidential.

Mubarak's state trial moved to Oct

Mubarak

The state felony theft trial for former Knox County Trustee's Office "ghost" employee Ray Murbarak, who also faces unrelated federal fraud charges, has been delayed until the fall.

Murbarak, who worked for the county from 2004-08, was initially scheduled for trial April 6.

However, earlier this month, Mubrarak, his wife and a business associate were arrested by Internal Revenue Service and FBI agents on charges of bank fraud.

They pleaded not guilty to those crimes and were given a May 5 court date.

On Friday morning, Murbarak's attorney Tom Dillard and state prosecutors asked Knox County Criminal Court Judge Steve Sword to delay the state trial.

"I'm not sure either side is ready, and he has other matters he needs to address," prosecutor John Gill said.

Sword set a trial date for Oct. 13. All sides will meet again July 9 for an update.

Dillard, after the brief hearing, agreed that his defense team needed more time and that they were "still working" on the case. He declined to elaborate further.

Mubarak faces a number of state felony theft charges alleging he benefited as a "ghost employee" for former trustee Mike Lowe, receiving pay for work he did not do.

Lowe cut a deal with the state earlier this month and received a year in jail and has to pay back $200,000.

Last year, a jury convicted co-defendant Delbert Morgan of theft. Morgan, who also was paid to do little if any work, received an eight-year term, all but 30 days of which are to be served on probation.

Mubarak and Morgan worked in the Knox County Trustee's Office from 2004 to March 2008.

Ex-Trustee Lowe pleads guilty to theft; to serve 1 year, pay fine

Former Knox County Trustee Mike Lowe pleaded guilty today in what prosecutors called the "most significant public corruption" case in the county's history.

He'll serve less than a year. However, the way it works out, the county will be in control of forcing him to pay back some $200,000 in fines as opposed to the state monitoring him. I think. Heh.

Here's the Knox County DA's press release RIGHT SMACK HERE.

Always the politician, Lowe entered court shaking everyone's hand. He sought at an on-camera interview and apologized profusely. Interesting stuff.

You can read the full story RIGHT SMACK HERE.

DA seeks 10 years for ghost worker

Delbert Morgan

Prosecutors are seeking as much as 10 years in prison for Delbert Morgan, one of two alleged ghost employees who received a paycheck for doing little if any work while employed under ex-longtime Knox County Trustee Mike Lowe.

Morgan's attorney is seeking only eight years of supervised probation.

He's scheduled to be sentenced for felony theft on Friday in Knox County Criminal Court Judge Steven Sword's court room.

Full story RIGHT HERE.

Judge denies ex-trustee's request to bring in out-of-town jury for trial

A Knox County Criminal Court judge denied a request by former long-time Trustee Mike Lowe to bring in potential jurors from another locale to hear his felony theft trial when in begins in early April.

Judge Steven Sword, in an order issued Tuesday, said he reviewed some 96 newspaper and television articles submitted by the defense, and he felt the “vast majority of the evidence” against Lowe “has not been publicized.”

He also noted that the majority of coverage reflected the actual development of court proceedings and “is not a case by its nature that involves information that would tend to appeal to the prurient interests of the public.”

“In other words, there are no ‘gory details’ that would tend to excite passions,” Sword wrote. “There is a greater danger of losing the interests of the jurors than invoking passion against the defendant.”

Lowe’s attorney, Gregory P. Isaacs, on Monday argued that "pervasive and inflammatory" media coverage and his client's "unique name dynamic" will prevent him from getting a fair trial if local residents sit on the jury.

The state, however, disagreed, saying attorneys had no problem last August when they selected a panel to hear a trial for one of Lowe's co-defendants.

At the time, only a handful of people even recognized Lowe's name, the state said.

Sword agreed.

“A jury was chosen within a half-day and none of the extra jurors were needed,” he wrote. “The court expects selection of the jury to proceed in a similar manner in Mr. Lowe’s trial.”

Ex-Trustee Lowe seeks venue change

Mike Lowe

Knoxville attorney Greg Isaacs - not one to shy from media coverage - will be in Criminal Court on Monday, asking for a change of venue for his client - former long-time Knox County Trustee Mike Lowe.

The reason? "Pervasive and inflammatory" media coverage.

Er, yeah, ha. Sure. (Wonder if this blog entry counts. Heh.)

Rest of the story RIGHT SMACK HERE.

Ex-Trustee 'ghost' worker sentencing pushed to Friday the (Feb.) 13th

Morgan

The so-called ghost-employee, who worked under ex-longtime Knox County Trustee Mike Lowe won't be sentenced until Friday, Feb. 13.

Delbert Morgan, who was paid to do little if any work, between March 2004 and March 2008 for the county's tax collections department, was found guilty in late August of felony theft.

He was supposed to be sentenced on Monday, but Knox County Criminal Court Judge Steven Sword agreed to postpone the hearing to give Morgan's attorneys time to get a copy of the initial trial's transcripts and review them.

During Monday's brief hearing, defense attorney Richard Gaines told the court that he "found something new" in the transcripts. He declined to say what exactly, but said his request to review the paperwork will focus on the opening and closing arguments.

Morgan's charge is punishable by eight to 12 years in prison. He also can receive probation. Prosecutor Bill Bright declined to say what the state will request.

The jury, after a two-week long trial, found the 58-year-old Grainger County businessman guilty of felony theft.

Morgan is the first of at least two other former Trustee's Office workers, including former long-time Trustee Mike Lowe, who prosecutors say swindled taxpayers out of possibly $1 million between 2004 and 2008.

Ray Mubarak, another employee accused of collecting a paycheck and not actually working, and Lowe will go to trial on April 6.

Jury selection set for Tuesday for former Trustee's Office worker

Delbert Morgan

The trial for a so-called ghost employee, who worked under ex-longtime Knox County Trustee Mike Lowe, was delayed until Tuesday.

Delbert Morgan, 58, was paid to do little, if any work, between March 2004 and March 2008 for the county's tax collections department, prosecutors say. He's charged with multiple counts of felony theft of more than $60,000.

Morgan's trial was expected to begin Monday, but Knox County Criminal Court Judge Judge Steven Sword postponed jury selection until Tuesday morning to continue hearing motions that started Thursday.

Defense attorneys filed one motion to dismiss the case, saying key documents that would prove their client's innocence have gone missing over the years. The defense also asked the judge not to allow a fraud investigator to serve as an expert witness.

The trial is expected to focus on the time Morgan spent away from the office and the payments he received from his former supervisor of four years, Mike Lowe.

Lowe and another supposed ghost employee, Ray Mubarak, are expected to go on trial later this year.

Morgan served as a field auditor and Mubarak worked as an office clerk and then a field auditor. They both abruptly resigned on March 8, 2008, about the same time Fred Sisk, Lowe's successor, took over.

At the time, they earned $37,500 annually.

The theft charges are Class B felonies and each carries $25,000 in fines and are punishable by eight to 12 years in prison.

Prosecutors have set aside two weeks for Morgan's trial. Mubarak's is scheduled for Nov. 5 and then Lowe will go to trial on Dec. 1.

Court records say that during the time Morgan "purportedly worked for the Trustee's Office," he was actually working at his other businesses – Celebrity Choppers, Morgan Development, MDN, National Kennel Club and Real Estate Market, Inc.

He also spent part of the time "at medical appointments or on trips outside of Knox County," records state.

Employment records for Morgan show that he received almost $200,000 in salary, overtime and benefits between spring 2004 and spring 2008.

His cell phone records, which are a part of his legal file, comprise thousands of pages and often place him outside of the county during regular business hours.

Attorneys for ex-Trustee Mike Lowe, former employees back in court

Mike Lowe

Attorneys for ex-longtime Knox County Trustee Mike Lowe and two of his former so-called ghost employees were in court Thursday to finalize trial dates and provide all parties with an update on when each side will get the information it's requested.

As it stands, Lowe will go to trial on Dec. 1; Ray Mubarak's will begin Nov. 5 and Delbert Morgan's will start on Aug. 18. The trials could last up to two weeks each.

Assistant District Attorney General Bill Bright noted that the dates have been changed a number of times because of "the massive amount of information" involved in the case. The defendants were initially set to go to trial in late 2013, and then later this summer.

On Thursday, he told Knox County Criminal Court Judge Steven Sword that his staff has turned over most of the data requested by the defense attorneys, but still has to provide and verify some cell phone records, and secure an expert witness.

He suggested that it would be a "very quick" turnaround.

Attorneys for the defendants declined to comment after Thursday's status hearing on the case.

Rest of the story right here.

Trustee hires attorney amid investigation

Knox County Trustee John Duncan III finally lawyered up.

On Friday Jeff "Hollywood" Hagood confirmed to me that JD3 hired him to represent him in the latest mess associated with those who think it's a great idea to serve as county trustee. (Remember there's already an investigation going on into the Mike Lowe administration from some years back.)

Anyhoo, Hagood is well-known for repping some high-profile University of Tennessee athletes as well as former UT football coach Phillip Fulmer. He's also done work for the Duncan family in the past.

Duncan has declined to comment.

More on the grand jury probe

Apparently, the grand jury investigation into the Trustee's Office has been going on for at least a few weeks, but people are only starting to talk now because there's been quite a bit of activity happening over at the Deathstar.

And that always makes for good gossip. Heh.

(I posted a little about this yesterday.)

Anyhoo, testimony will resume tomorrow and at least one person from the Knox County Trustee's Office will meet with the jury. That employee, however, is not a target, and is expected talk more about office procedures.

I also talked to John Haun's attorney, John Valliant and former Trustee Mike Lowe's attorney, Gregory P. Isaacs. (There were a few accusations thrown around about Lowe as you might recall.)

Valliant didn't say much, but his guy is expected to eventually testify at some point. Haun will probably be able to cut a deal, but he's also expected to be charged at some point for overpaying himself some mega-extra coin. He'll also repay the scratch from what his attorney has said in the past.

In the meantime, it's quite possible - after more than two years of the TBI investigating this (alleged) mess - that residents could finally have some answers. Or not.

Who knows. It's possible someone could get indicted. Then, of course, they go to court. If they win, they walk. And if they lose, well, do they really lose?

You do remember the Cynthia Finch trial, don't ya?

Regardless, we'll have a more complete story about this in tomorrow's News Sentinel.

Grand jury for former trustee

I might as well throw this out, even though it's about the worst kept secret of the day, yet no one wants their name attacked to it on the record. But, a couple of my sources have confirmed that:

The grand jury has convened to investigate former Trustee Mike Lowe or at least some of the funny stuff that went down during his tenure. There's a lot to recap, so I'll just throw out some story links right here and here and here.

One person expected to testify will be John Haun. I recently wrote a story about him and his laughable "willingness" to pay back some money he might owe the county. You can find that story here.

No end in sight for Trustee probe

It seems on the surface, anyway, that the Tennessee Bureau of Investigation moved fast when agents looked into former Criminal Court Judge Richard Baumgartner.

And the resolution was even quicker.

Less than a year after the TBI started its September 2010 probe, the long-time judge resigned from his post and pleaded guilty to official misconduct, a felony.

That was a few weeks ago.

So what the heck is going on with that investigation into the Trustee's Office? It's been kicking around for years, and a number of folks, including several county commissioners, have called me, saying they believe it's political.

I'm not sure about that, but it certainly seems to be dragging.

And, of course, state investigators aren’t saying much.

“It’s still an ongoing active investigation, so there’s nothing we can release,” Jerri Powell, special agent in charge of the TBI’s Criminal Intelligence Unit, told me Friday. “I’d say it will be a little bit (longer).”

And that was the extent to that conversation.

However, John Duncan III, the county’s trustee since September (who has nothing to do with the past allegations), provided some insight to me last week.

Although he acknowledged that “there’s no indication on when things will get wrapped up,” he did say that as recently as two weeks ago, “they were asking for old records.”

He didn’t elaborate on what. Either that or I forgot to ask. (Hey, it’s freakin’ blog, I can’t provide everything here. I got to save the good stuff for the paper.)

“My impression is that they just had one investigator and they had to pull her off the case and put her on other cases,” Duncan said. “But the last time they came in there were three of them.”

Well then, maybe something will happen soon.

Anyhoo, Duncan said they were looking at (stop me if you’ve heard this one before) “extra comp time payments and ghost employees."

“They requested documents for people who were supposedly out serving summons,” he said. “They were digging back eight to 10 years. I’m not sure how many (former employees) were involved.”

Well, that makes sense.

This whole mess dates to the Mike Lowe era.

Back in February 2009, Duncan’s immediate predecessor, Fred Sisk, asked the TBI to examine payroll practices in the trustee’s office after a $68,000-a-year employee received $195,000 in total 2008 compensation. (That would be operations manager Johnny Haun, whom Sisk fired by the way.)

The state also is looking into payroll discrepancies involving extra payments of overtime, vacation and sick leave. (Some of the would be under the Sisk-administration.)

Sisk also fired Sam Harb, the office’s delinquent-tax supervisor and online payment manager, in April 2010.

Harb, too was connected to the TBI probe. In fact, when the whole thing began, the agency seized three computers of employees, including his.

For his part, Duncan says he’s cleaned house (essentially two folks) of anyone who might have any connections to the investigation. (He actually got rid of a third person for unrelated reasons when he took office.)

“To the best of my knowledge there’s no one in my office being looked at,” he said.

When asked what he’s heard about the investigation (the state isn’t telling him a whole lot either, according to Duncan), he said: "You always hear different things that they’re supposedly looking into. You also hear about people doing political work on county time.”

Then, after saying that, he quickly stressed that he told his workers that he won’t accept any future campaign contributions and that they better not be doing work on county time.

He did say that a few of them asked whether they could support candidates in the city’s upcoming mayoral race.

He said that’s fine. As long as it’s after 5 p.m.