Wal-Mart's Coughlin Gets Home Detention, 5 Years Probation

by Arkansas Business Staff  on Friday, Aug. 11, 2006 1:50 pm  

Thomas Coughlin, the former vice chairman of Wal-Mart Stores Inc. of Bentonville, was sentenced Friday afternoon to 27 months of home detention, five years of probation and ordered to pay $461,000 in fines and restitution after pleading guilty to wire fraud and tax evasion.

Coughlin pleaded guilty in U.S. District Court in Fort Smith in January to five counts of wire fraud and one count of tax evasion. Each wire fraud count carried a possible sentence of five years in prison and a $250,000 fine. The tax evasion charge carried a possible sentence of three years in prison and a $100,000 fine.

On Friday, Coughlin was ordered to pay restitution in the amount of $306,822 to Wal-Mart and $104,395 to the Internal Revenue Service. He was also ordered to pay a $50,000 fine.

Arkansasbusiness.com will update this story.

Coughlin pleaded guilty as part of an agreement with prosecutors, which came after months of negotiations between the two parties.

Coughlin, a personal friend of the late Wal-Mart founder Sam Walton, announced in December 2004 that he would retire as head of all U.S. Wal-Mart and Sam's Club stores in January but would remain on the company's board until June 3. But on March 25, Coughlin resigned from the board, and Wal-Mart told the Securities & Exchange Commission that it had requested his resignation because of a disagreement concerning gift card use and reimbursements valued between $100,000 and $500,000.

Wal-Mart filed suit against Coughlin in July claiming that between 1997 and 2003 he had fraudulently obtained or billed the company for $223,709 worth of personal expenses, including $1,350 for "hornback gator" cowboy boots and $714 for the taxidermy of a wild boar with a rattlesnake in its mouth.

Coughlin had denied wrongdoing, claiming that he was reimbursing himself for a secret Wal-Mart scheme to fund an anti-union spy operation. Wal-Mart has said Coughlin's claim isn't true.

Wal-Mart later froze Coughlin's benefits and tried to pull his $12 million retirement package, but Benton County Circuit Judge Jay Finch threw Wal-Mart's lawsuit out of court saying the company had agreed to pay Coughlin in his retirement.

As vice chairman of the company, Coughlin was the No. 2 executive at Wal-Mart behind CEO Lee Scott. Coughlin had been with Wal-Mart since 1978.

On Nov. 7, Robert E. Hey Jr., a former vice president of operations development for Wal-Mart, pleaded guilty to three counts of wire fraud in U.S. District Court in Fort Smith. His case appeared to be related to Coughlin's. Hey's indictment frequently referred to a senior executive identified only as "John Doe" that Hey allegedly assisted in a scheme to defraud the company. Hey reported to Coughlin at Wal-Mart.

In June, Hey was sentenced to one day in prison, fined $3,000 and placed on supervised release for six months.



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