Guilty plea in fraud case
Conant grad faces jail time after embezzling $365K from gym
CONCORD — A former Jaffrey resident has pled guilty to wire fraud in an embezzlement cases involving more than $365,000, while working as a payroll manager for six health clubs over the course of a year and a half. According to court documents out of the U.S. District Court in Concord, the money was used to illegally obtain Percocet, as well as drug treatment.
Nikki Donovan, 25, of Hollis graduated from Conant High School in 2007, and went on to graduate from the University of New Hampshire in 2011, according to published reports.
Donovan held a position as payroll manager for Gold’s Gym from January 2011 to July 2013, managing payroll for six health clubs in Nashua, Manchester, Merrimack, Milford, Goffstown and Hudson. Donovan received weekly compensation from each health club. Her salary was calculated and paid from the health clubs’ checking accounts by a payroll company on an hourly basis. While working from her Nashua-based office, Donovan electronically reported payroll information to a North Reading, Mass., company that used the information to calculate employees’ salaries and issue checks.
Prosecutors said Donovan intentionally falsified the number of hours she worked as well as her hourly wage in order to embezzle hundreds of thousands of dollars from her employer. Donovan pleaded guilty to the charges in U.S. Federal Court in Concord last week.
According to her plea agreement, when Donovan was first hired to work on payroll, she was paid $10.50 per hour, or $420.20 per week. Half of her salary was paid for by the Nashua club, and the remaining half was split evenly between the five other clubs for which she managed payroll.
In 2011, Donovan began reporting she was working in excess of 40 hours per week. As a result, she received $17,026.49 in excess of her legitimate salary. Donovan claimed that she frequently worked more than 40 hours per week during this time period, but conceded that the overtime hours were not expressly authorized, and they would not substantially offset the losses accrued by her intentional misreporting of hours.
In January 2012, Donovan became a salaried employee, working 35 hours per week for a wage of $393.72 per week, or the equivalent of a $11.25 hourly wage. When reporting her salary, Donovan correctly reported the salaries she was owed, but also additionally falsely stated that she had performed additional work every week for each of the six gyms that employed her, for which she was entitled to be paid $11.25 per hour. This false reporting led to Donovan embezzling a further $109,041.02 in 2012 and $238,969.39 in 2013.
In early July 2013, the owners of the health club, who were still unaware of Donovan’s embezzlement, made the decision to hire a new payroll manager. Her employers told Donovan that a fellow employee identified in court documents as “Amanda” would be a back-up payroll manager.
According to court documents, Donovan believed that the decision to hire another payroll person meant that her embezzlement had been discovered, and she resigned her position shortly after the additional payroll employee was hired. The scheme was not discovered, however, until August 2013.
Prior to contacting police, the owner of the gym exchanged multiple text messages with Donovan, in which she confessed to him that she had indeed misrepresented her wage and hours worked in order to use the money to pay off debt, including car payments and her student loans, and to feed an addiction to the painkiller Percocet. She also used the money to fund outpatient treatments for her addiction, in order to hide it from her family and friends. In the messages, Donovan pleaded with her former employer not to contact the police, attempting to offer to pay back the funds over time.
“All I can say is I knew this day was going to come and I wish more than anything that I never let it get to this,” Donovan texted, according to transcripts of text exchanges included in court documents. “...The only thing I can do is make weekly payments, and I know it is not going to be enough....Again, I beg of you to let me find a way to do this without involving the police, but I also understand that it does not work that way,” she texted.
Donovan texted that she had acted alone in her scheme, writing, “There is literally no one else involved in this. No one else even knew.”
Where the money went
Donovan met with a Nashua Police Department detective on Sept. 13, and admitted that she had stolen the money. She told police that she used approximately 80 percent of the money to buy Percocet and to pay for treatment of her addiction. At that time, she was arrested and charged with theft by unauthorized taking or transfer consolidation.
In the text exchanges with her former boss, Donovan said the money had been spent, “getting the drug at first and then getting the medicine I needed to get off the drugs. It went towards an outpatient program that I went to start the process of getting clean.”
The rest of the money, she said, had been spent paying off bills and debt. “It would be easier to explain if it was just one thing,” one text message read. “But it was everything I was so far behind on so many bills even before I got caught up in the other stuff that once I started and got hooked it just made everything so much worse and I didn’t know how to stop without this being the result....”
In other text messages, Donovan references using the funds for rent, groceries, car payments and repairs, and also stated in court documents that they were also used to pay for student loans.
Wire fraud, in the amounts that Donovan stole, could carry maximum penalties of a prison term up to 20 years, a fine of $250,000, or twice the gross gain or loss caused by the offense, which ever is greater — for Donovan this would mean compensation potentially up to $730,000 — and a term of supervised release of not more than three years.
After reaching a plea agreement with the court, Donovan pleaded guilty to the wire fraud charge at the Federal Court in Concord on March 27. In return for her guilty plea, the government shall recommend that Donovan be sentenced at the low end of the advisory sentencing guidelines.
As a result of her plea agreement and submitting her guilty plea, Donovan will not be tried on the wire fraud charge. She is scheduled to be sentenced at the Federal Court in Concord on July 17.
The case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Robert Kinsella.
Ashley Saari can be reached at 924-7172 ex. 244, or firstname.lastname@example.org. She’s on Twitter @AshleySaari.