The U.S. Department of Justice has indicted Kenneth Kennedy on seven counts of wire fraud and five counts of mail fraud in the Middle Tennessee District. His wife, 58-year-old Sheila Kennedy, pled guilty on Tuesday, March 24, for her role in the investment fraud case, which has been reported as defrauding victims of as much as $7.5 million.
Sheila Kennedy pled guilty to wire fraud, mail fraud and money laundering for a scheme that dated back to April 2005, said David W. Boling, a public affairs officer for the U.S. Attorney’s Office at the Justice Department.
She, her husband and two other co-defendants, Philip Russel and Ann Scarborough, reportedly looked for investors for fake real estate deals in Las Vegas, Nev., Paducah and Indiana, according to the justice department.
She pled guilty to one count of wire fraud and one count of mail fraud, which each carry a maximum sentence of 20 years, and two counts of money laundering, which each carry a maximum sentence of 10 years; she will be sentenced at a hearing later this year, Boling said.
Kennedy admitted, as per her guilty plea arrangement, that she and her husband never invested any of the money, the amount of which was between $2.5 million and $7.5 million, mainly for hotel rooms, gambling, spa visits and new clothes, and admitted further that the supposed real estate opportunities in fact never existed, Boling said.
Investors gave Kennedy and co-conspirators money, generally by way of checks payable to “ASK, LLC,” and got back “promissory notes or time notes,” said Boling. ASK, LLC was a company operated by Kennedy and the co-conspirators, Boling added.
Sheila Kennedy and a co-conspirator or co-conspirators sought out new investors after February 2006, in a scheme that was run like the scheme that was started in 2005, and like in that scheme, real estate opportunities that were advertised didn’t in fact exist, Boling said.
Kennedy admitted that when investors figured out the scheme, she told them she was due for a large inheritance and that if the made new investments, she would give them their investment back plus interest, but knew that the new funds would also be used for her personal benefit and the benefit of the co-conspirators, according to Boling.
Kenneth Kennedy hadn’t yet submitted a plea at press time, but has a trial date set for Tuesday, May 12, at the Federal Courthouse in Nashville, Tenn. Ty Howard, the attorney prosecuting the case, said he couldn’t comment on specifics involving Kenneth Kennedy or the other two co-defendants, as those cases are still active.
The court will determine the exact amount of the loss and restitution for the individual victims of the investment scheme at Sheila Kennedy’s sentencing hearing, said Boling.
In 1981, Kenneth Kennedy was elected as Trigg County Attorney and held the position for much of the 1980s.
The Federal Bureau of Investigation, the Internal Revenue Service’s Criminal Investigation unit and the United States Postal Inspection Service conducted the investigation.