Nicholas J. Ganjei United States Attorney for the Southern District of Texas | U.S. Attorney for the Southern District of Texas
The former president of Bendco, a pipe and tubing company based in Pasadena, Texas, has pleaded guilty to charges of tax evasion and bankruptcy fraud. This was announced by U.S. Attorney Nicholas J. Ganjei.
John Philip Tharp, who led the company that specialized in bending pipes and tubes for oil and structural applications, admitted to embezzling funds through various fraudulent activities. Bendco filed for bankruptcy in February 2018.
Tharp confessed to diverting customer payments for personal use by cashing them at local businesses. He also directed the issuance of fraudulent checks payable to cash or fictitious vendors without legitimate business connections. To cover up these actions, he altered financial records by deleting invoices.
"Bankruptcy exists to shield those that find themselves in dire financial straits, and to give people fresh starts," said Ganjei. "When somebody commits bankruptcy fraud, they’re abusing this legal protection, and cheating those that lent them money, goods, or services. Here, through his duplicitous acts, the defendant unfortunately turned a messy financial situation into a criminal matter."
Lucy Tan, acting Special Agent in Charge of IRS Criminal Investigation’s Houston Field Office, commented on the case: "When you cash checks intended for your business, put it in your personal account and hide the evidence, it’s fraud. When you declare bankruptcy and fail to report the checks, it’s bankruptcy fraud. When you fail to file your tax returns and try to conceal how much you would owe, it’s tax evasion."
Court documents revealed that Tharp's scheme took place during Bendco's bankruptcy proceedings when all incoming funds were supposed to be deposited into a Debtor in Possession (DIP) account. Tharp admitted he caused false monthly operating reports to be filed with the bankruptcy court.
His embezzlement resulted in a loss of $413,480. Additionally, Tharp failed to file a 2018 tax return and willfully evaded paying $126,430 owed to the IRS.
Sentencing is scheduled for September 22 by U.S. District Judge Andrew S. Hanen. Both counts carry potential sentences of up to five years in prison each. Tharp agreed to pay restitution amounting to $413,480 to Bendco and $126,430 to the IRS.
He remains on bond pending sentencing.
The investigation was conducted by IRS Criminal Investigation with Assistant U.S. Attorneys Shirin Hakimzadeh and Brad Gray prosecuting the case.
