Middletown man gets four years after stealing from widow, then her estate, DOJ says

A former Middletown man was sentenced to four years in prison after pleading guilty to two counts of wire fraud and admitting to lying on tax returns, the U.S. Department of Justice announced Friday.

According to the DOJ, 55-year-old Donald Rice pleaded guilty to the counts on Oct. 26, 2017, and was sentenced on May 29.

Rice had been indicted on seven counts of fraud. He was accused of stealing from an elderly widow, and after her death, the woman's estate, and then later another company.

While assisting the client with her “estate planning” in August 2011 through his accounting practice Rice Diversified Financial Group, Rice gained signature authority over her bank accounts and became executor of her estate, court documents said.

Following the woman's death in March 2012, Rice wrote a series of checks to himself and his related business account, and liquidated a certificate of deposit for his personal use, the court said. 

In addition, Rice failed to notify a public pension system of his client’s death and continued to collect and spend her pension payments until October 2013, about 18 months after her death. Through these actions, Rice stole additional funds totaling about $120,000, court documents said.

Then in December 2012, Rice became the trustee for a trust established to liquidate the assets of a closely-held investment company. As part of the trust plan, Rice was responsible for maintaining the funds set aside to cover the anticipated taxes associated with the dissolution of the company. 

Instead, between January 2013 and January 2015, the DOJ said he diverted about $3 million into his personal accounts through a series of wire transfers and the deposit of a cashier’s check. 

According to the DOJ, Rice then used this money for personal expenses, including the acquisition of several tax preparation franchises, a down payment on a new home, jewelry and a BMW 550i luxury vehicle. 

Federal law requires that all income, whether obtained legally or illegally be declared on tax returns. According to the Internal Revenue Service, Rice failed to report the proceeds of his fraud on his tax return for 2013. 

“The defendant preyed upon people who placed their trust in him, victimizing companies and vulnerable senior citizens alike," said U.S. Attorney David C. Weiss in a release. "His actions were unconscionable.”

Reach Jerry Smith at jsmith17@delawareonline.com. Follow him on Twitter at @JerrySmithTNJ.

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