SAN DIEGO -- An East Coast couple convicted of embezzling federal funds intended to provide film industry job training, benefits and equipment for wounded Marines returning from Iraq and Afghanistan were sentenced in San Diego to prison stints.
Judith Ann Paixao, 61, and her husband, 64-year-old Kevin Lombard, received 12- and six-month custody terms, respectively, with each defendant to serve half the time in federal lockup and half in home confinement.
U.S. District Court Judge Jeffrey Miller also ordered the Afton, Virginia, residents to pay about $150,000 in penalties and restitution.
Last summer, a jury found the couple guilty of mail fraud, false claims, conspiracy to defraud the federal government and theft from an organization receiving government funds as part of their activities with the Wounded Marine Careers Foundation.
From 2007 to 2009, according to court documents, Paixao and Lombard used their positions as directors of the tax-exempt film school to defraud the Department of Veterans Affairs, submitting false claims to get funds for training and equipment they never provided while embezzling funds.
Though the defendants claimed to have donated more than $200,000 to start the foundation, they wound up taking over $400,000 from its accounts over the course of two years, prosecutors contended at trial.
Though some of the money went to repay expenses they had fronted to the foundation, the defendants allegedly misappropriated other funds to pay for a variety of personal expenses, including a family vacation in Bermuda, prescription drugs and a New Year's Day sailing trip around San Diego Bay.
Paixao and Lombard also routinely commingled the finances of the foundation with their own, thereby obstructing the ability of the Internal Revenue Service to monitor the Foundation's tax-exempt status and determine the defendants' personal income-tax liability, according to the U.S. Attorney's Office in San Diego.
During Thursday's sentencing hearing, the judge observed that "whatever commendable vision served to launch the foundation, that idealism spawned theft, embezzlement and worse."
Miller described several factors that created the "lens through which the jury viewed the evidence in this case," including the defendants' false claim that they had donated hundreds of thousands of dollars to the foundation from the sale of their home, which they actually had lost to foreclosure.
The judge also referred to other misrepresentations regarding high-end video cameras acquired by the foundation and billed to the Department of Veterans Affairs at inflated costs.
In explaining the why he imposed low-end custody sentences, Miller referred to the defendants' extensive community support, including from many members of the military; a low risk of recidivism; and the court's assessment that the defendants "began with a vision or goal that was worthy" when they first reached out to wounded Marines.
Despite the mitigating factors, however, the defendants "deserved to be prosecuted," the judge asserted, adding that the case should serve as a deterrent for anyone who would be tempted to victimize charitable institutions, their donors or their beneficiaries.
