KERRVILLE, Tx. (HCBN)- Authorities indicted former SALT Group president Stephen Canty, age 57, on November 28, for allegedly manipulating accounting records.
His indictment was for one count of making a false statement on a loan or credit application.
The indictment says that Canty “submitted falsely inflated figures to Texas Capital Bank,” and “overstated to Texas Capital Bank the value of accounts received of HJH Consulting Inc. and affiliated companies by $24 million.”
The indictment also states, “Texas Capital Bank will loan to a business customer based on the value of the collateral the company pledges to secure the debt. In the case of HJH Consulting Inc. and affiliated companies, the borrowing base was largely based upon the value of the companies’ accounts receivable.”
Canty is set to have his first appearance before U.S. Magistrate Judge Elizabeth Chestney in San Antonio on December 12.
San Antonio Express-News reports that Cynthia Orr, Canty’s defense lawyer, said that he will appear in court on a summons on Tuesday and will enter a not guilty plea.
If Canty is convicted, he faces up to 30 years in prison and may be expected to pay restitution, which hasn’t been determined yet, according to Darryl Fields, public information officer for the United States Attorney’s Office of the Western District of Texas.
Please scroll down to view previous HCBN reports regarding Stephen Canty and The Salt Group.
Kerrville consulting company president faces new accusations
KERRVILLE, Tx. (HCBN)- 05/4/2018- As reported before, HJH Consulting Group Inc, also known as The Salt Group, filed for bankruptcy and is allegedly being investigated by the FBI. Then the company accused former president of 19 years, Stephen Canty, of breaching his fiduciary duty.
The latest news coming from the consulting company is that the president has now been accused of overstating the amount of money clients owed the company by $25 million.
During a creditors meeting on Monday, bankruptcy lawyer James Wilkins said that by manipulating the books, Canty was able to tap more of the company’s $27 million line of credit with Texas Capital Bank. He stated, “We’re going to find out exactly what he embezzled, pilfered,” as reported by San Antonio Express-News.
It has been reported that HJH has had three audits a year over a five year period, 15 audits that were signed off.
Texas Capital Bank, a creditor of HJH, is trying to determine the “true receivables” that it has liens on. The bank reportedly has a forensic accountant reviewing the books.
The reason for false entries by Canty is unknown and the former employees say they have yet to be paid for their final weeks of work. The employees were instructed to file their claims with the bankruptcy court.
HJH Consulting Group Inc. hasn’t taken any legal action against Canty, as of yet, and Canty hasn’t made any public comments.
The Salt Group in Kerrville accuses former president of fraud after company files for bankruptcy
KERRVILLE, Tx. (HCBN)- 04/25/2018-As previously reported, the HJH Consulting Group Inc, also known as The Salt Group, filed for bankruptcy and is allegedly being investigated by the FBI. Now the company has accused former president, Stephen Canty, of breaching his fiduciary duty.
According to San Antonio Express-News, HJH didn’t elaborate on its claims against Stephan Canty and his attorney, Gerald “Gerry” Goldstein declined to comment.
The company said it has a claim against Kerrville accounting firm Pressler, Thompson & Co. as well. San Antonio Express-News determines that according to the filing, the reason for the claim is for “committing malpractice in regards to conducting audits for the debtor for a number of years.”
San Antonio Express-News searched the Kerr County court records but their search didn’t turn up with any litigation filed by HJH against either Canty or the accounting firm. HJH’s bankruptcy lawyer, James Wilkins, declined to comment to San Antonio Express-News.
Pressler, Thompson partner Tim Porter said to San Antonio Express-News that he wasn’t aware of any claim HJH might have against his accounting firm. He said it’s possible HJH may contend the firm failed to detect fraud during its financial audits, but added that’s not the job of an outside auditor.
“It says right on the opinion letter that if we detect (fraud), we will let it be known,” Porter said in a phone interview with San Antonio Express-News. “But the purpose of an audit is the expression of an opinion on financial statements.”
Information shared by San Antonio Express-News states that in a recent court filing, HJH listed their assets as $2.5 million and their liabilities as $25.2 million. Included in the assets is about $866,000 in monies owed and $1.2 million in office furniture and equipment. The consulting group also owes $24 million to Texas Capital Bank.
The Salt Group had noted that their revenue for 2016 was almost $2.9 million but dropped last year to $1.5 million. This year, before they filed for bankruptcy they reported only $150,872.
San Antonio Express-News reports that on Friday, U.S. Bankruptcy Judge Craig Gargotta issued an order authorizing HJH and other debtors to use Texas Capital Bank’s cash collateral to pay company employees and cover operating expenses.
As stated in bankruptcy court papers, HJH intends to sell the business as a “going concern” under a reorganization plan.
FBI reportedly investigating The Salt Group in Kerrville
KERRVILLE, Tx. (HCBN)- 04/12/2018- The FBI is reportedly investigating possible financial wrongdoing at a local business. The HJH Consulting Group Inc, also known as The Salt Group, presumably filed for bankruptcy last week.
According to Monday’s court filing, the consulting company disclosed the reason for seeking bankruptcy is “due to the fact that one of its employees manipulated the accounting records of the Debtor to the Debtor’s detriment.” Also according to Monday’s court filing, “the Debtor is advancing a reorganization through a going concern sale” of the business.
The San Antonio Express-News was told on Wednesday from a female employee who didn’t wish to disclose her name, “We’re still operating.” She directed further inquiries to San Antonio attorney James Rosenblatt.
Stephan A. Canty, Salt Group’s former president declined to comment to San Antonio Express-News but stated that he was represented by San Antonio criminal defense lawyer Gerald “Gerry” Goldstein.
A person familiar with the bankruptcy case told San Antonio Express-News that a company official had overstated its receivables for years to obtain funding on a bank loan. The official recently confessed, triggering a criminal investigation.
FBI spokeswoman Michelle Lee said to San Antonio Express-News that the agency doesn’t confirm or deny the existence of investigations.
San Antonio Express-News reports that the company filed for Chapter 11 reorganization on April 2. Two related companies, US Tax Recovery Partners and B2B Prospecting, filed their own bankruptcy petitions but the three cases have since been consolidated. The three companies have substantially overlapping obligations, according to a court filing. Each listed assets of $50,000 or less and liabilities ranging from $10 million to $50 million. Texas Capital Bank is listed as the largest creditor in each petition, owed $24 million — of which $10 million is unsecured.