Ex-lawyer guilty in $133 million swindle

SAN ANTONIO — A San Antonio businessman who is also a disbarred lawyer has pleaded guilty for his role in what officials have described as the largest fraud case ever filed here — a tax and insurance swindle with losses of more than $133 million.

Larry W. Kimes, 61, squandered the money on vacations, girlfriends, gambling trips to Las Vegas and other personal expenses, prosecutors have said.

He entered the plea this week for tax fraud conspiracy and mail fraud conspiracy related to payroll services and workers' compensation insurance. He is the last of six co-defendants to do so.

The charges stem from his role in having duped mom-and-pop businesses and taxpayers between 2002 and 2008, using professional employer organizations that had various names or related entities. He was the manager of AccounTex Financial Services LLC, one of the entities used in the swindle.

The case is considered the largest actual monetary-loss case ever prosecuted in the Western District of Texas, which includes Waco, Austin, Del Rio, Alpine, Midland-Odessa and El Paso.

The FBI and IRS arrested Kimes last year during their five-year investigation.

Authorities said Kimes' companies would claim they collected and remitted to the IRS employment payroll taxes for the small businesses, but they instead pocketed the money. The scheme included creating new firms and walking away from the tax liability, unbeknownst to the small businesses that hired them.

Besides keeping money that should have gone for taxes, professional employer organization executives kept money from fees for workers' compensation insurance that was not provided, the IRS and FBI said.

In 1996, Kimes was disbarred from practicing law in Texas, State Bar of Texas records show. Kimes is also an accountant no longer licensed here.

In 2000, the Texas State Board of Public Accountancy recommended he be reprimanded for “discreditable acts,” records show. But he was licensed until July 2012, when his license expired, the board's records show.

Five others have pleaded guilty for their roles in the scam: Charles Pircher, John D. Walker II, John Bean, Michael Solis and Patrick Mire.

Chief U.S. District Judge Fred Biery will sentence the five on Feb. 21. Kimes' sentencing has not yet been scheduled. He faces up to 25 years in prison.