Former Wal-Mart vice chairman pleads guilty to fraud, tax charges
FORT SMITH, Ark. – A former Wal-Mart Stores Inc. vice chairman who was a protege of founder Sam Walton pleaded guilty to fraud and tax charges Tuesday, admitting that he stole money, gift cards and merchandise from the world’s largest retailer.Tom Coughlin, 57, pleaded guilty to five counts of wire fraud and one count of filing a false tax return. The charges carry a maximum penalty of 28 years in prison and a $1.35 million penalty, but prosecutors have likely recommended a reduced sentence as part of a plea bargain.The judge ordered a presentencing report that will take up to four months to prepare.Wal-Mart lawyers referred Coughlin to federal prosecutors after discovering Coughlin had embezzled money from the company and used expense vouchers to buy products as varied as snakeskin boots, hunting trips and Bloody Mary mix. They estimated losses at up to $500,000.In federal court, Coughlin spoke only when he was asked questions by U.S. District Judge Robert Dawson. Afterward, defense lawyers issued a statement in which Coughlin accepted responsibility for “serious personal mistakes in judgment.””This was not an easy decision. I regret the embarrassment this matter has caused my family and friends and I thank them for their support, love and friendship,” Coughlin said in the statement.In documents filed with the court, Coughlin specifically admitted defrauding the company to pay for the care of his hunting dogs, lease a private hunting area, upgrade his pickup truck, buy liquor and a cooler, and receive $3,100 in cash.As the company vice chairman, Coughlin received a base salary of $1.03 million in his final year with the company. A filing with the Securities and Exchange Commission last April said Coughlin also received $3.09 million in bonuses and other income in fiscal 2005. Coughlin held about $20 million in Wal-Mart stock, according to an SEC filing last February.The former executive said his guilty plea was in the best interest of his family, friends and community. He remained a Wal-Mart cheerleader, asking associates “to pull together in fulfilling Sam Walton’s dream of creating the world’s greatest retailer.”Prosecutors recommended a sentence but Dawson sealed the plea agreement. The judge said he was concerned that he read many of the plea deal’s details in newspapers before any documents were filed with his court.Nothing was mentioned in court about restitution.Wal-Mart spokeswoman Mona Williams said the ordeal has been “embarrassing and painful.””Someone we expected to operate with the highest integrity let us down in a very public way. Wal-Mart has high ethical standards and the way we handled this matter makes it clear that every associate will be held to these standards with no exception,” Williams said.Coughlin retired as Wal-Mart vice chairman last year and gave up his spot on the company board in March after Wal-Mart referred him to prosecutors. The matter was taken up by a grand jury in Fort Smith.In November, former Coughlin subordinate Robert E. Hey Jr. agreed to plead guilty to wire fraud and testify for the government in return for parole instead of prison time.Besides giving the case to federal prosecutors, Bentonville, Ark.-based Wal-Mart filed suit last year to end Coughlin’s multimillion-dollar retirement agreement and to recover money.However, that lawsuit was dismissed by an Arkansas judge who said both sides had signed a pledge as part of Coughlin’s retirement deal not to pursue any claims against each other for any reasons. Wal-Mart has said it will appeal the dismissal of its lawsuit to the Arkansas Supreme Court.According to filing of information that was filed with the plea, Coughlin specifically admitted to:-falsifying a travel expense voucher to pay $700 allegedly for travel and meeting expenses, but which was actually for the care of Coughlin’s hunting dogs;-using a false invoice for $6,500 to pay for a private hunting lease;-using a false expense statement to cover $2,695 for upgrades to his 1999 Ford truck, which he claimed as reimbursement for meeting expenses;-using fraudulently obtained gift cards to pay for a cooler, two cases of Smirnoff, two cases of Miller Light beer, a bottle of Jack Daniels, a carton of tequila, and other items from a Sam’s club in Joplin, Mo.-using a false invoice to receive a check for $3,100 that was cashed and the funds provided back to Coughlin for his personal use;-filing a false tax return.No mention was made in court of Coughlin’s claim that he used money obtained from Wal-Mart to pay for anti-union activism. Wal-Mart has said there is no such project.