Posted: 6:11 p.m. Thursday, July 11, 2013

Judge issues no prison time in $1.7M fraud case

By Mark Gokavi

Staff Writer


A federal judge on Thursday gave no prison time and told, “Godspeed” to a North Carolina man convicted by a jury of four counts related to defrauding a local bank and the U.S. Small Business Association out of $1.7 million.

Prosecutors, who had hoped for a sentence of 30 months, objected to the ruling.

Paul David Musgrave, 57, of Waxhaw, N.C., was ordered by U.S. District Judge Timothy S. Black to pay $1.7 million in restitution and to serve three years’ supervised release, perform 100 hours of community service and pay fines totalling $400.

Musgrave could have faced up to 30 years in prison, a $1 million fine, and five years of supervised release on each count. Federal advisory sentence guidelines — which the judge is not bound by — pointed to a prison term of between 51 and 71 months. Musgrave’s attorney, William Terpening, asked for home detention, which the judge did not impose.

In late January and early February, Musgrave had been on trial and the jury deliberated for three days before convicting Musgrave of one count of conspiracy, two counts of wire fraud and one count of bank fraud.

Though Black said during the 2½-hour sentencing that he hadn’t seen much acceptance of responsibility from Musgrave, the judge said he “was reached” by the numerous letters of support and character witness offerings of six people out of more than 20 friends, family and associates that attended the hearing.

Among the items Black listed to explain his ruling were that Musgrave had no criminal record, didn’t receive any of the $1.7 million, lost about $300,000 of his own money, endured “four years of hell,” would likely lose his certified public accounting license, had medical issues including sleep apnea that require a machine for proper sleep, that his services were needed by Production Screw precision machining in East Dayton and that he was not likely to re-offend. Musgrave mostly works for Production Screw remotely.

According to trial testimony, Musgrave and others in November 2008 organized Dayton International Tire Recycling as a small business intending to construct and operate a tire recycling plant at 1400 Lytle Road in Troy.

Musgrave, who had lived in the Dayton area, owned 81 percent interest in the company. The rest was held by a Singapore-based corporation known as Intercontinental Trading of the British Virgin Islands.

In 2010, Musgrave applied for an SBA-backed loan for $1,715,650 from the Mutual Federal Savings Bank of Troy. In the loan application documents, he falsely certified that he would put money from his personal savings, home equity and from a home equity line of credit toward the project, according to trial testimony.


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