Johnson City, Texas, official sentenced to 37 months for embezzlement

BY SourceMedia | MUNICIPAL | 09/29/22 02:33 PM EDT By Connor Hussey

Anthony Michael Holland, former chief administrative officer and secretary of Johnson City, Texas, has been sentenced to 37 months in federal prison and ordered to pay $1.175 million in restitution for the embezzlement of state government funds, according to his second amended judgment filed on Sept. 21.

Holland pleaded guilty to one count of theft from state or local government that receives federal funds on Dec. 15, 2021 and following his imprisonment, will be on supervised release for three years.

The fees Holland has been ordered to pay consist of $50,000 to the TML Intergovernmental Risk Pool, an organization that provides workers compensation and employers liability coverage, with the rest going to Johnson City.

"Anthony Holland repeatedly betrayed the trust of the people of Johnson City by stealing from them over the course of six years while holding the positions of City Secretary and Chief Administrative Officer," said U.S. attorney Ashley Hoff. "We are proud to have prosecuted this case in federal court and our office will continue to hold those that corrupt our local governments and harm our communities accountable for their actions."

According to the city, he began siphoning off funds beginning in 2015 through automated clearing house and wire transfer transactions and presented them as though they were legitimate city expenditures for items such as office supplies and other goods and services. He also recorded some transactions to a fictitious company known he called AMHS Inc.

Additionally, he created a counterfeit invoice from a fictitious paving company and arranged for an individual to speak to the city auditor and pretend to be a representative from the company.

He will also forfeit all right, title and interest to his property in San Antonio, Texas.

The federal charges leveled against Holland in December 2021 by the U.S. Attorney's Office for the Western District of Texas preceded those brought by the Securities and Exchange Commission, which alleged he falsified financial statements and misled investors in an attempt to hide his ongoing embezzlement of city funds.

In the SEC case, without admitting or denying the allegations, Holland agreed to cease future violations of securities laws and to be barred from participating in the municipal market, including the preparation of certain documents related to muni bond offerings. He also agreed to pay a penalty, which is to be determined at a later date by the court.

The scheme began when during his time as chief administrative officer and secretary from 2015 to 2020, Holland stole $1.12 million, and used the money to cover personal living expenses, federal charges alleged.

To then cover up the missing funds, Holland delayed Johnson City's 2016 annual audit and after two years of pressure from the city's mayor, municipal advisor and a withdrawal of its rating by a ratings agency, in May 2018 he then falsified the 2016 reports by changing the dates on the 2015 financial statements and audit report.

The falsified reports were then circulated to Johnson City's mayor, who posted them on the city's website and to the city's municipal advisor, who posted them on EMMA, as part of the required disclosure on the city's bond issues.

The documents on EMMA stayed up until April 2020, during which time there had already been secondary trading on the city's debt. Johnson City sold bonds in 2012 and 2015.

The financial statements understated the city's revenues by 8%, its expenses by 23% and overstated the city's debt by around 5%, the SEC alleged. But the documents didn't reflect that Holland embezzled $107,137 in 2016, or nearly 5% of the city's total revenues.

The lid was blown open in February 2020, when a financial examiner, who had been an investor in the city's 2015 securities, discovered the falsified documents, the SEC said. They then alerted the city's auditor, who notified the city, launching an investigation.

By September, the embezzlement had been revealed and Holland resigned from his post after 15 years in various administrative positions for several Texas cities and a school district, the SEC said.

Federal charges were then leveled against Holland just over a year later in December 2021 and the SEC's charges came roughly six months after that.

"The City thanks all parties that brought forth justice in this matter, and it expresses its deepest gratitude to City residents and local business owners for their patience through this process, as the need for confidentiality over the past year was simultaneously necessary and difficult," the City said.

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