Ghost Employee Convicted and Ordered to Pay County $200,000
A former ghost employee of the Knox County Trustee’s Office pled guilty-as-charged today and agreed to pay Knox County $200,000 in restitution for a scheme that defrauded taxpayers. Prosecutors in DA Charme Allen’s White Collar Unit convicted Ray Mike Mubarak, 56, of Theft over $60,000, a Class B Felony. Under the terms of the agreement, Mubarak was sentenced to ten years where he must serve one year in jail with the balance on probation. Mubarak was sentenced in a separate federal case to fifty-seven months in custody.
“One of the key factors in this agreement is that the people of Knox County retain jurisdiction to ensure Mubarak pays back every penny he owes,” said DA Allen.”We did not want to turn jurisdiction over to the Tennessee Department of Correction or the parole board.” Under Tennessee law, once a defendant is remanded to the Department of Correction, the local court and prosecutor loses jurisdiction over issues like how long the defendant actually serves in custody and whether a violation warrant will issue if a defendant fails to meet their obligations like paying restitution. More and more defendants are being released by TDOC under”safety valve” provisions, serving much less time than what was actually ordered by the sentencing judge. A ten-year sentence with one year in jail is the maximum sentence under the law where the local court can retain jurisdiction over a defendant.”We made sure Mubarak will serve time in custody for his crime. We made sure he will be supervised upon his release from custody. We will also make sure he is violated and arrested if he does not repay the citizens of Knox County.”
The investigation into fraud at the Trustee’s Office was spearheaded by prosecutors Bill Bright and John Gill and Tennessee Bureau of Investigation Special Agent Jamesena Rutherford. A special grand jury was empanelled to comb through records and uncover the scheme. The investigation revealed that on October 2, 2004, Knox County Trustee Mike Lowe added Ray Mubarak to his staff as a field auditor. Lowe and Mubarak knew that Mubarak would be an employee in name only and would perform little if any work for the Trustee’s Office. Lowe placed Mubarak under his direct supervision so only Lowe would know whether Mubarak actually performed any work. Lowe ordered that Mubarak be paid for seven and a half hours of work per day plus overtime. Mubarak signed blank time cards that were later filled in with the fraudulent time. This practice continued until March 7, 2008. Under this scheme, Mubarak was paid $196,580.32.
In addition to the fraudulent time card scheme, Lowe and Mubarak entered into an agreement where Mubarak would create a title company that charged the county $250 to generate a title abstract to assist in selling properties at tax sales. Mubarak would then find a title abstractor to actually perform the work for $55 to $60, pocketing the difference in price. Lowe also paid Mubarak $100,000 for four hundred title abstracts that were never ordered or provided.
The investigation into the Trustee’s Office included coordination between multiple state and federal agencies. Financial discrepancies discovered during the investigation led authorities to discover a separate mortgage fraud scheme that resulted in a federal prosecution and conviction by the United States Attorneys Office.
Mike Lowe pled guilty in March to Theft and agreed to pay $200,000 in restitution. Another ghost employee, Delbert Morgan, was convicted in August of 2014 following a two-week trial. In July, Morgan paid Knox County restitution in the amount of $196,816.08. The additional $200,000 Mubarak must pay brings the total amount of restitution ordered to $596,816.08, which more than covers the total amount of money stolen from taxpayers: $593,396.40.
If you have any questions, please contact Sean McDermott at 865-215-2515 or Sean.McDermott@knoxcounty.org. For more information about the District Attorney’s Office, visit our website at dag.knoxcountytn.gov and follow us on Facebook and Twitter.