A 56-year-old Williamsburg man pleaded guilty Friday to a pair of charges that accuse him of draining the bank and investment accounts of his medically incapacitated parents from more than $1 million down to about $2,000.
Stephen Kohout entered guilty pleas to wire fraud and concealment money laundering in the U.S. District Court for the Eastern District of Virginia. He faces a maximum of 40 years in prison and a $750,000 fine when he is sentenced July 10.
Kohout began handling the financial affairs of his parents in 2006, at which point their assets exceeded $1 million and were held in bank and investment accounts. In 2007, he received full control of those accounts, and used business entities he created to trade $55,000 belonging to his parents, according to a news release from the office of the U.S. Attorney for the Eastern District of Virginia.
Between 2008 and 2011, he wired about $465,000 from his parents’ investment accounts to their bank accounts, where he then wrote 86 checks totaling $386,000. All but one of those checks were deposited into an account in Kohout’s name, according to the release.
The money was spent on personal living expenses, loan payments, credit card bills, dining, entertainment and more. He also used his parents’ resources as gifts, loans to his siblings and for his parents’ medical care.
By December 2012, his father was dead and his mother lived in a nursing home in Pennsylvania. That nursing home threatened to evict his mother due to financial problems. Kohout declared bankruptcy in January 2013, and his sister took over as emergency guardian of her mother’s resources. Her mother had about $2,000 left in her bank account by the time Kohout’s sister gained control of her mother’s affairs.
Pennsylvania’s Department of Public Welfare is assisting the mother with her living expenses at the nursing home.
The FBI and Internal Revenue Service investigated the case.