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Albion hospital embezzler pleads guilty in tax fraud case

Rochester Business Journal
January 16, 2014

A former Orleans Community Health payroll clerk who pleaded guilty to wire fraud charges for embezzling nearly $500,000 from the Albion hospital also has pleaded to tax fraud for not reporting the embezzled money as income. 

In a plea bargain entered Wednesday before U.S. District Judge William Skretny in Buffalo, Linda Rakonczay admitted to ordering OCH’s bank to regularly transfer funds from an OCH corporate account to her personal account.

Rakonczay had worked for OCH, formerly known as Medina Memorial Hospital, from 1990 to 2012. For the last 11 years of her employment, she skimmed approximately $60,000 a year from the hospital’s payroll account.  

Rakonczay, 58, faces maximum penalties of 20 years in prison and a fine of up to $250,000 on the wire fraud charge, which covers the embezzlement. The tax evasion charge carries a maximum three-year prison term and could make Rakonczay liable to pay a second fine of up to $250,000.

The plea deal she inked with federal prosecutors could recommend a 30 to 33-month sentence but does not bind Skretny to its terms. She is slated to appear for sentencing in the Buffalo federal court May 5.

As laid out in the plea agreement, Rakonczay’s thefts went undetected between 2001 and 2012, netting her $499,563 in all. Terms of the plea bargain call for her to make pay an additional $100,000 in restitution to OCH for a total of $599,563.

In the embezzlement, Rakonczay spaced payments at two week intervals corresponding to OCH’s pay periods. To cover up the amounts she skimmed off the hospital’s payroll account, she inflated the hospital’s health insurance bills. As a precaution, Rakonczay halted transfers during periods when auditors were scanning OCH’s books, the plea agreement states.

Because of a statutory limitation, the tax evasion charges only covers the $375,000 Rakonczay embezzled between 2007 and 2012. According to the Internal Revenue Service, she owes $93,999 in back taxes.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.
 



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