Former Kerrville executive accused of embezzlement wants retirement money
A bankrupt Kerrville consulting firm that has accused its former president of embezzlement is now suing him over his company retirement savings account.
US Tax Recovery Partners filed suit Tuesday in U.S. Bankruptcy Court to prevent ex-President Stephen A. Canty from collecting the roughly $200,000 in his 401(k) plan.
The monies “were the fruits of crime,” the company says in its lawsuit.
Raymond Battaglia, a lawyer for Canty, declined to comment on the lawsuit. Attorney James Wilkins, US Tax Recovery Partners’ bankruptcy lawyer, did not immediately respond to a request for comment.
US Tax Recovery Partners is asking the court to declare that all of the money belongs to the company. It also wants the money put in a a “constructive trust” for its benefit.
The lawsuit appears to be the first legal action the company has taken against Canty, who it accused of fraud and breach of fiduciary duty by manipulating the company’s books.
Canty overstated the amount of money clients owed the company by $25 million, allowing it to a tap a $27 million line of credit, its bankruptcy lawyer said earlier this year.
Canty “confessed to wrongdoing and criminal activity,” the lawsuit states. FBI agents have been investigating, three people familiar with the probe told the San Antonio Express-News in April. FBI spokeswoman Michelle Lee did not have any immediate comment when reached Tuesday.
US Tax Recovery Partners and related companies HJH Consulting Group, doing business as The Salt Group, and B2B Prospecting filed for bankruptcy protection April 2. Manipulation of accounting records were cited as the reason for the bankruptcy filings.
HJH has provided cost and expense reduction advice to clients for 30 years. US Tax Recovery Partners, which has ceased doing business, offered to help clients achieve tax savings. B2B Prospecting helps drum up business for HJH.
Canty, 57, was terminated March 26 after a 19-year career at HJH. State corporate records listed him as HJH’s president, but he also served in the same role at US Tax Recovery Partners.
According to US Tax Recovery Partners’ lawsuit, all of the contributions to Canty’s 401(k) were payroll deductions from his salary.
Canty wants $55,000 from the account paid to him, with the remaining $145,000 going to an Individual Retirement Account.
Patrick Danner is a San Antonio-based staff writer covering banking and civil courts. Read him on our free site, mySA.com, and on our subscriber site, ExpressNews.com. | firstname.lastname@example.org | Twitter: @AlamoPD