Former Rutherfordton ABC store manager pleads guilty to wire fraud and money laundering for embezzling more than $374,000

Date: Sept. 10, 2024

Contact: [email protected]

Asheville, NC - Russel Edward Hester of Rutherfordton, N.C., appeared before U.S. Magistrate Judge W. Carleton Metcalf yesterday and pleaded guilty to federal charges for embezzling $374,807.10 from the Alcohol Beverage Control Board of Rutherfordton, announced Dena J. King, U.S. Attorney for the Western District of North Carolina.

Donald "Trey" Eakins, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Charlotte Field Office, Tommy D. Coke, Inspector in Charge of the Atlanta Division of the U.S. Postal Inspection Service (USPIS), which oversees Charlotte, and Chief Clint Ingle of the Rutherfordton Police Department, join U.S. Attorney King in making today's announcement.

According to filed plea documents, from December 2021 to October 2023, Hester embezzled at least $374,807.10 from the Alcohol Beverage Control Board of Rutherfordton (the Board) which manages the ABC Store where Hester worked as a manager for nearly 10 years. As store manager, Hester had access to, and control over, the Board's financial accounts and records, wrote checks to pay bills, and was responsible for creating the budget each year. Hester was also responsible for providing all information needed for the annual independent third-party audit of the ABC Store.

According to court records, beginning as early as Dec. 19, 2021, Hester used the Board's debit card to withdraw funds at Two Kings Casino. Continuing until Oct. 22, 2023, Hester used this debit card at the casino 192 times to withdraw funds totaling $374,807.10, and used the money to gamble, primarily playing slot machines. On days where Hester used the Board's debit card, he won jackpots totaling $1,469,368.31, and deposited the winnings into his personal bank accounts. For example, on July 4, 2023, Hester used the Board's debit card to withdraw $3,000 at Two Kings Casino. Hester then placed these funds into a slot machine and won a jackpot of $18,350. Hester elected to have this jackpot issued in the form of a check, which he deposited into a bank account under his control.

Plea documents also show that Hester took steps to cover up the embezzlement. For example, during the Board's 2023 annual independent audit, Hester provided multiple altered and falsified bank statements to the auditor. In furtherance of the fraud, Hester removed transactions from the casino, added fabricated transactions, and falsified bank account balances on the statements before providing them to the auditor.

Hester pleaded guilty to wire fraud and money laundering. He is currently released on bond. At sentencing, Hester faces up to 20 years in prison for the wire fraud charge and 10 years in prison for the money laundering charge. A federal district court judge will determine Hester's sentence after considering the U.S. Sentencing Guidelines and other statutory factors. A sentencing date has not been set.

In making today's announcement, U.S. Attorney King commended IRS-CI, USPIS, and the Rutherfordton Police Department for their investigation of the case and thanked the Rutherford County District Attorney's Office for its invaluable assistance.

Assistant U.S. Attorney Alex M. Scott of the U.S. Attorney's Office in Asheville is prosecuting the case.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

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