Ex-employees of HOTCO Accused of Embezzlement and Forgery
(Stillwater, Okla.) -- Two former employees of Hough Oilfield Services, also known as Hotco, have been charged with embezzlement of the Cushing-based company's funds and forgery of checks in a case investigated by Cushing police and the state crime bureau.
Linda Sue Newton, 62, a Lincoln County resident living in rural Cushing, who was employed by Hotco for 20 years, is alleged to have embezzled a total of $159,086.21 between 2007 and 2010, to pay her credit card debt, according to court documents filed last week.
Newton is also alleged between 2009 and 2010 to have falsified business records of Hotco by issuing checks to legitimate vendors of the company in identical amounts to checks she had fraudulently written for her own benefit to conceal her embezzlement.
If convicted of two counts of embezzlement and one count of second-degree forgery, Newton could be given a 27-year prison term and ordered to pay restitution along with a $20,000 fine, court records show.
Kara Jean Sanders, 33, a former Cushing resident who now lives in Bixby, is alleged to have embezzled a total of $23,135.16 between 2009 and 2011, according to court documents filed last week.
Sanders is alleged to have written seven checks from Hotco accounts totaling $13,398.41 "over and above defendant's legitimate compensation by Hotco," between Aug. 8, 2009, and Feb. 15, 2011, according to one embezzlement count.
Sanders is alleged to have used a Hotco American Express credit card account on 87 occasions to make personal expenditures totaling $9,736.75 between Jan. 7, 2010, and Aug. 15, 2011, with the knowledge the bills would by paid by Hotco, according to another embezzlement count.
Sanders is alleged to have altered five checks to Hotco by erasing the company as payee and substituting her own name -- then passing the five checks totaling $14,773.90 to a Stillwater bank between March and July of 2011, according to five second-degree forgery counts.
If convicted of her seven counts, Sanders could be given a 45-year prison term and an order to pay restitution along with a $10,000 fine, according to the charge filed last week.
The criminal charges against both former employees came a month after Hotco filed a civil lawsuit for embezzled funds in Payne County against Linda Sue Newton, Kara J. Sanders, and Randall Newton -- alleging embezzlement, conversion and fraud.
Hotco chief executive officer David Hough filed an affidavit with the lawsuit on March 21 alleging that in August 2011, he discovered that Linda Sue Newton and Kara J. Sanders "had both embezzled substantial amounts of money from the corporation."
"Linda Sue Newton had embezzled at least $171,000 since 2006 and Kara J. Sanders had embezzled at least $40,000 since 2010," Hough alleged in his affidavit.
"Linda Sue Newton and Kara J. Sanders had converted money from Hough Oilfield Services Inc. (Hotco) using fraudulent schemes of altering checks, misusing credit cards and other means of counterfeit transactions, all for their personal benefit," Hough alleged in his affidavit.
"Recent activities of Linda Sue Newton and her husband include having liquidated assets of a cattle operation," which Hough believed was "out of character with their normal or usual behavior," according to his affidavit.
Hough "believes there to be a high likelihood that the defendants are continuing their course of conduct by hiding assets which rightfully belong," to Hotco, according to his affidavit.
"The likelihood of guilt for Linda Sue Newton and Kara J. Sanders is great as they both have made confessions to the investigator of the Oklahoma State Bureau of Investigation during a pending investigation for multiple counts of criminal embezzlement," Hough alleged in his affidavit.
In the lawsuit, Hotco alleged that Randall Newton -- who has not been charged with any criminal wrongdoing -- "knew or reasonably should have known of the large infusions of funds into their family income and assets by his spouse," Linda Sue Newton.
The lawsuit seeks that embezzled money be paid back with interest to Hotco.
Hotco received a temporary restraining order preventing the Newtons and Sanders "from disposing of any asset, including but not limited to bank accounts, other financial accounts, real estate/real property, personal property, livestock and that they not take on any financial obligations or transfer assets, titles or deeds until further order of the court."
However, Associate District Judge Stephen Kistler, who had granted the restraining order on March 21 and an amended restraining order on April 2, vacated both on April 6 -- after the Newtons filed objections to the restraining order.
"The banking institutions are ordered not to restrict the disbursement or access to funds by the account holders," for any reason related to the lawsuit, the judge ordered.
The judge added, "Linda Newton and Randall Newton shall remit $100,000 to the trust account of Robert Post, attorney for plaintiff (Hotco) within five days of those funds being released."
In his objection to the restraining order, Randall Newton had noted that Hotco's only claim against him is that he "should have known of the large infusions of funds into (the Newtons') family income and assets."
The Newtons both emphasized that they had never been served any court documents in the civil lawsuit.
In her objection to the restraining order, Linda Newton noted that Hotco "generates several million dollars per year as a corporation serving the oil and gas industry.
"Since October 2011, plaintiff's CEO David Hough and his wife have believed that Mrs. Newton, a 20-year employee and former officer of the corporation, used corporate funds to pay personal bills during her employment.
"The Houghs now seem intent to exact their own brand of retribution upon Mrs. Newton," Linda Newton noted in her objection to the restraining order.
Hotco "did not explain that Mrs. Newton routinely used her personal credit card to purchase supplies and equipment for the corporation, a fact clearly relevant to the calculation of any alleged liability or damages," her objection to the restraining order said.
In claiming that the Newtons had never been served with any court documents in the civil lawsuit, Linda Newton noted that Hotco's CEO "owns property adjacent to the Newtons' property," and had sent her several certified letters over the past months.
Linda Newton alleged that Hotco did not want to serve her court documents "because then she could have appeared to challenge the request" for a temporary restraining order -- which was subsequently vacated by the judge.