This story first appeared on Cowboy State Daily
A former chief financial officer for Wyoming Catholic College is accused in a federal lawsuit of running an elaborate scheme to defraud a New York asset management firm of $15 million.
Paul McCown is accused in a lawsuit filed in U.S. District court of falsifying financial documents and even posing as a bank official to convince Ria R Squared to loan him $15 million.
The lawsuit filed in late June said that within “hours or minutes” of McCown receiving the loan, he transferred most of the loan proceeds to other people — including relatives, associates and Wyoming Catholic College itself, which received an anonymous $10 million contribution through McCown’s actions.
“This is the story of a complex, calculated, methodical and fraudulent scheme, orchestrated by an individual holding a trusted and respected position with the Wyoming Catholic College, to defraud R Squared out of the sum of $15 million,” the lawsuit said.
WCC, in a statement Wednesday, said it was in the process of returning the money.
Wyoming Catholic College was not named as a defendant in the lawsuit and no claim was made that the college was involved in the scheme.
In the statement, WCC said McCown was placed on indefinite administrative leave on June 5 because of personal financial irregularities and resigned on June 25.
“Over the past month, to experience such a profound breach of trust by a leader of our institution, has been both embarrassing and painful for Wyoming Catholic College,” the college said.
It added there was no evidence of financial irregularities at the college.
According to the lawsuit, McCown was introduced to David Kang, president and chief executive officer of R Squared, by WCC’s executive vice president, Jonathan Tonkowich.
McCown told Kang he was looking to obtain advisory services related to the college’s endowment fund.
In March of this year, McCown advised Kang he was searching for investment advisory services on his own behalf for his “substantial personal wealth.”
The lawsuit said McCown provided Kang with bank statements from Wyoming Community Bank that revealed small balances in January and February that grew in March to $750.3 million as the result of a large deposit.
He also offered US Bank statements “which appeared to confirm the large transfer …”
McCown told R Squared to address all of its questions to a Kendall Hayford, who he identified as his bank officer at Wyoming Community Bank. An R Squared representative had a telephone conversation with a man identified as Kendall Hayford using a telephone number supplied by McCown.
McCown in May texted Kang that he needed a short-term loan for $10 million — an amount later increased to $15 million. He referred R Squared to Hayford for the necessary banking information.
The loan was made on May 11.
Meanwhile, McCown continued to move forward with setting up an investment advisory account with the $761 million reportedly in his account. A person identifying himself as Hayford said the money had been released and a wire transfer to R Squared had been initiated on May 21.
“However, the funds did not arrive that day, or on the following Monday … (or ever),” the lawsuit said.
When looking into the situation, R Squared reached out to Wyoming Community Bank’s president and “McCown’s fraudulent activities began to become known.”
When contacted about the loan, McCown denied borrowing the money or signing any loan documents.
Further investigation revealed the bank statements provided to R Squared were forgeries and that McCown never had hundreds of millions of dollars in Wyoming Community Bank.
While Kendall Hayford is an employee of Wyoming Community Bank, the number and email given R Squared by McCown were both false and Hayford’s signature on documents was forged.
Within hours of receiving the money, the lawsuit said, McCown transferred most of it to relatives, including his father and brother- and sister-in-law, to himself and to the Wyoming Catholic College colleague who introduced him to Kang.
He also obtained a cashier’s check payable to the state for $841,863.
“The falsity, and the great lengths Mr. McCown took to exact his plan, became known only days after funding the loan,” the lawsuit said. “Regrettably, the vast majority of the funds have now been disseminated to various entities and individuals affiliated with Mr. McCown, including his family members and his employer.”
The lawsuit said R Squared could not account for about $1 million of the loan.
The lawsuit asks the court to issue an injunction to prevent the further distribution of the money.
“Given the elusive and creative nature of Mr. McCown to date, and his blatant and brazen disregard for the consequences of his misconduct, it is imperative that Mr. McCown … be restrained from (his) ongoing fraudulent conduct, the continued dissipation of assets, including the funds fraudulently obtained, and the hindrance of justice,” it said.
A hearing on the company’s request has been scheduled for July 16.
The lawsuit accuses McCown of a number of charges, including fraud and breach of contract, and asks that the court force McCown to repay the loan plus interest, along with punitive damages to be determined in the course of the lawsuit.