Saturday, August 12, 2006
Former Wal-Mart executive Tom Coughlin, who was with the company from its founding by Sam Walton and served most recently as vice-chairman of the board of directors, received a 27-month term of home confinement after pleading guilty to defrauding the company and tax evasion. Coughlin admitted to taking gift cards for use at company stores and submitting bogus invoices to pay for personal expenses, totaling over $300,000. Wal-Mart initiated the prosecution when it turned over information to the U.S. Attorney's Office that it developed in an internal investigation. Among the items purchased with one gift card was a cooler and two cases of beer. Coughlin's salary for his last three years he worked at Wal-Mart totaled approximately $2.9 million, and when he left the company he owned almost 700,000 shares (see 2005 Proxy here), which at the current price would be worth approximately $30 million. What is missing in this type of case is an explanation for why one would put so much at risk for an amount less than the annual dividend on Coughlin's shares.
Although the Sentencing Guidelines called for a prison term of over two years, and prosecutors recommended six to twelve months in prison, U.S. District Judge Robert Dawson accepted the testimony from Coughlin's doctor that various illnesses made him too fragile to serve a prison term because he was "57 going on 87." Defense counsel's sentencing submission is available below and includes a summary of a number of letters submitted on Coughlin's behalf. Coughlin also must pay almost $411,000 in restitution to Wal-Mart and the IRS. A Reuters story (here) discusses the sentencing. (ph)