Thomas Malone got some huge bonus checks.
He wrote the checks himself — and, according to the federal government, was stealing the money from his Science Park biotech company.
Agents from the FBI and the federal Department of Health and Human Services’s inspector general’s office showed up at Malone’s West Rock Avenue home Thursday to arrest him for allegedly embezzling close to $1 million over four years from Artificial Cell Technologies, Inc. (ACT), the vaccine-technology company he helped found in 2005 and served as chief financial officer until January 2017.
Malone appeared in U.S. District Court on Church Street before U.S. Magistrate Judge Sarah A. L. Merriam, who released him on a $50,000 bond. The charge is “theft or bribery concerning programs receiving federal funds,” according to a press release from the U.S. Attorney’s Office.
ACT develops ways to produce malarial and respiratory vaccines “exponentially faster” and to personalize them on demand. The National Institutes of Health has granted the company more than $4 million.
Company CEO Donald Masters came upon the alleged embezzlement in November 2016 while reviewing payroll records while Malone was away on a personal trip, according to the arrest warrant affidavit prepared by Michael Ahearn, a special agent with the inspector general’s office of the U.S. Department of Health and Human Services.
“Masters discovered for the first time that Malone was paying himself approximately $660,000 in salary, far above the approximate $281,000 salary that he was entitled to receive,” Ahearn wrote. “Upon further review of the payroll records and other financial records, Masters discovered that Malone had been writing manual checks to himself for several years that were disguised as bonuses, that he had been giving himself unauthorized additional salary payments, that he had been using the ACT credit card for personal expenditures and that he had been making unauthorized donations to an organization that Malone personally supported.
Malone told Masters that he thought he could “set his own compessation at whatever level he wanted whenever he wanted,” and sought to maximize his 2016 compensation so he could then “significantly” cut his 2017 pay in order to qualify for financial aid at his children’s private school, according to the affidavit.
Masters placed Malone on leave, then discovered through a forensic audit that he’d stolen over $950,000, according to the affidavit.
Ahearn reported that he interviewed Malone, who “acknowledged that he was aware of the checks that were written on the ACT bank account to him because he, Malone, personally wrote the checks to himself. Malone claimed being one of the founders of ACT, once serving as the CEO, and later becoming the CFO of ACT gave him the authority to set his own salary and increase his salary without consulting the CEO, the investors, or Board members. Malone stated that when he wanted to give himself a pay raise, he just did.” (Malone’s wife served on the company’s board.)
What does one (presumably one posing as an upper middle class person) do with an extra half million dollars per year that doesn't call attention to oneself?