One local business owner is facing some serious allegations.
On Sept. 9, 2020, Michael J. Tiernan was indicted on seven felony counts of bank fraud, two felony counts of filing false tax returns and one felony count of failure to file income tax, according to court documents filed in the U.S. District Court for the Eastern District of Virginia.
Tiernan, the former co-owner, chief financial officer and controller of Ford’s Colony Realty, LLC. and Southeast Settlement and Title, LLC., allegedly embezzled thousands of dollars from both companies between 2015-17, according court documents.
“Beginning in or about January 2015 and continuing until at least the sale of Ford’s Colony and Southeast in or about May 2017, Tiernan committed a scheme to embezzle, steal, obtain by fraud an otherwise without authority, convert to Tiernan’s personal use moneys and funds owned by Ford’s Colony and Southeast,” according to the indictment. “Despite having agreed to forgo his salary and other capital outlays to keep the businesses afloat, Tiernan repeatedly stole and misappropriate funds from Ford’s Colony and Southeast by diverting funds to himself in excess of any salary, return of capital, or other outstanding debt.”
In 2015, Tiernan allegedly deposited approximately $88,000 from both companies into his personal account — including several checks from Ford’s Colony which totaled approximately $60,518.74, according to court documents. Yet, on Tiernan and his wife’s [A.T.] joint tax return, he allegedly reported his annual salary to the IRS as $40,863.00.
The next year, Tiernan and his wife allegedly wrote on their tax return that they were unable to pay off their outstanding debts, however the courts documents noted they allegedly spent more than $260,000 — mostly on “luxurious travel, dining, resorts, and retail purchases.”
“Tiernan continued to use the embezzled funds transferred from these business accounts for his own enrichment, including lavish personal expenditures like travel, high-stakes gambling, expensive restaurants, and the purchase of a luxury automobile,” according to the indictment.
Other allegations include Tiernan writing dozens of checks to himself from the Southeast business bank account, changing the mailing address associated with the account to his home’s mailing address and destroying records.
In 2019, the co-owners of Ford’s Colony and Southeast filed a civil lawsuit against Tiernan for “fraudulently diverting funds from the businesses contrary to their agreement to forgot salaries and keep the businesses afloat,” according to court documents.
After the suit was filed, Tiernan allegedly tried to justify the expenses he took from the Southeast bank account by making “backdated” invoices from older accounting work he did for both companies and others, according to the indictment.
That indictment, last updated on Jan. 6, showed Tiernan was released and later issued a summons.
Some of the conditions of Tiernan’s release included probation, surrendering any passports and prohibition from opening “new lines of credit or bank accounts” without permission from the probation office, according to the conditions of release document.
Wilfredo Bonilla Jr., a public defender from Norfolk office representing Tiernan, was not immediately available for comment.
David M. Coleman, one of the attorneys representing the court, declined to comment.
If Tiernan is found guilty of the allegations, he will have to give up “any property constituting, or derived from, or proceeds obtained directly or indirectly, as the result of the violation.”
If the property is not available, Tiernan would have to forfeit “a monetary judgement in an amount representing the proceeds the defendant obtained from the scheme alleged in this incident.”
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