Two men who co-founded healthcare financial software firm Canopy Financial have received prison sentences of more than a dozen years each after admitting that they misappropriated company money for personal expenses like luxury cars, ownership in a nightclub, and private jet travel.
Former Canopy Financial execs sentenced
Former Canopy President and Chief Operating Officer Jeremy Blackburn, 38, of Bolingbrook, Ill., received a sentence of 15 years in prison, while former Chief Technology Officer Anthony Banas, 34, of Homer Glen, Ill., received more than 13 years, a Justice Department news release said (PDF). Both were ordered to pay restitution of more than $93 million.
Banas was sentenced Wednesday, and Blackburn's punishment was handed down on Jan. 24. Both men pleaded guilty in late 2010 to one count of wire fraud. The company declared bankruptcy after the scheme unraveled.
Prosecutors said the pair defrauded investors, mainly from private equity firm Spectrum Equity Investors, of $75 million invested in preferred stock in mid-2009 that went to pay off earlier investors, including Blackburn and Banas. The Spectrum investments were made after the pair falsified bank statements and audits, their plea agreement says (PDF).
Investigators said the two men also misappropriated a total of $18 million from customer accounts. Canopy had been in the business of selling software that managed financial transactions for personal health savings accounts, of which they had more than 1,600.
The news release from the Justice Department said the company's bankruptcy trustee anticipates paying the medical claims of Canopy's health savings account customers from the funds that have been recovered through bankruptcy proceedings, which so far total about $50 million.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.