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Former Bay Springs city clerk pleads guilty in connection to embezzlement

A challenge to the Affordable Care Act will be heard in Federal Court in Hattiesburg in October.
A challenge to the Affordable Care Act will be heard in Federal Court in Hattiesburg in October.
Updated: Oct. 7, 2020 at 5:47 PM CDT
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HATTIESBURG, Miss. (WDAM) - A former Bay Springs city clerk pleaded guilty in federal court Wednesday after embezzling more than $300,000 from the city.

Randy James, 56, pleaded guilty before Senior U.S. District Judge Keith Starrett in Hattiesburg to engaging in monetary transactions in property derived from specified unlawful activity and making false statements on income tax returns.

According to prosecutors, James embezzled more than $300,000 from the city of Bay Springs between August 2017 and April 2018 through fraudulent invoices charged to fake companies.

James then diverted the funds by obtaining city checks and cashing them at Magnolia State Bank before wiring the funds overseas to scammers who had led him to believe he could win $175 million in a lottery scheme.

Bank employees became suspicious of the transactions and notified other Bay Springs officials.

“One of the highest priorities of this office is bringing to justice corrupt officials who betray our public trust," U.S. Attorney Mike Hurst said in a news release. “I commend local bank employees who spotted this criminal activity, as well as our federal, state, and local law enforcement partners and prosecutors who were diligent in catching this crook and holding him accountable. We will continue to do all that we can to root out criminality and corruption in all forms of government.”

James also underreported gross receipts by $193,331 on his personal 2018 Federal Income Tax Return.

“Today’s guilty plea sends a clear message that public officials, whether elected or appointed, hold positions of trust in the eyes of the public. This trust is broken when these officials commit crimes,” said Demetrius Hardeman, assistant special agent in charge with the Internal Revenue Service. “No public official gets a free pass to ignore the tax laws, and IRS-CI works diligently, in concert with state and local partners, to ensure everyone pays their fair share.”

Mississippi State Auditor Shad White issued a demand letter for $325,561 to James in February 2019, accusing him of embezzling about 10% of the city’s annual budget during those years. The demand letter included the amount he was accused of embezzling plus interest and investigative costs.

A criminal information filed by the U.S. Attorney’s Office in the Southern District of Mississippi on Sept. 24, 2020 charged James with the two federal counts he later pleaded guilty to. James waived his right to have his case heard by a grand jury during his arraignment before Magistrate Judge Michael T. Parker Wednesday.

Immediately after the arraignment, James and prosecutors moved to the courtroom next door for a change of plea hearing before Starrett.

In a plea agreement made with the U.S. Attorney’s Office, James agreed to pay a total restitution of $420,562.84, with $265,561.84 going to the State Auditor’s Office on behalf of Bay Springs, $95,000 to be paid to the Internal Revenue Service and $60,000 to be paid to RLI Surety, a company covering Bay Springs with a surety bond at the time of the embezzlement.

Bay Springs Mayor Pro Tempore Bob Cook attended Wednesday’s arraignment and change of plea hearings.

After the guilty pleas, Cook told WDAM that closure was needed for the city and that no one was really the winner in this situation. He said the city will learn from it and adjust policies to ensure that something like this is not possible in the future.

James is scheduled to be sentenced on Jan. 12, 2021 by Starrett. He faces up to 10 years in prison and three years of supervised release under the first count, as well as three years in prison and one year of supervised release on the second count.

James will remain free on an unsecured bond of $50,000 until sentencing.

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