Ex-CEO, ex-controller of Worley & Obetz charged in $1M fraud

Jeffrey B. Lyons and Karen L. Connelly were arrested Monday morning on fraud charges. - (Photo / Submitted)

The former CEO and former controller of Worley & Obetz Inc. were charged Monday with years-long misuse of company funds totaling over $1 million to cover the CEO’s personal credit card debt, according to the Lancaster County district attorney’s office.

Jeffrey B. Lyons, former CEO of Worley & Obetz, and Karen L. Connelly, longtime controller for the company until her retirement in 2016, were arrested Monday morning, according to the district attorney’s office.

Northern Lancaster County Regional police determined Worley & Obetz funds covered over $1 million in credit card debt for Lyons, with Connelly authorizing most of the payments.

Police identified a number of credit card accounts linked to Lyons and repaid using company funds. In all, investigators documented $1.015 million in company funds that went to the credit card accounts.

The largest payments – $811,371 in total – were made since 2010 on a Chase Sapphire account, according to the district attorney’s office.

Lyons, 57, was arrested at his Manheim Township home. He is charged with six felonies including five variations of theft and dealing in proceeds of unlawful activities, a first-degree felony.

Connelly, 64, is charged with two felonies, including dealing in proceeds of unlawful activities and conspiracy to commit theft.

The investigation is ongoing and involves other agencies, the district attorney’s office said.

The former Penn Township-based energy company buckled in June after Lyons briefly disappeared.

Fulton Bank in July filed a complaint in U.S. Bankruptcy Court, alleging that Lyons received, directly or indirectly, $1 million in transfers from the Lancaster energy company, which filed for bankruptcy in June.

The complaint said that Lyons submitted fraudulent accounts receivable over at least the last four years on the basis of which Fulton lent millions of dollars to Worley & Obetz. Fulton’s suit described it as a “massive fraud.” Other banks also lent money to the company.

Until now, it has been unclear whether Lyons acted alone.

Connelly – whom the district attorney’s office said was the only person besides Lyons who had access to company funds – told authorities that a “package deal” allowed Lyons to use corporate funds to repay credit-card debt, according to the district attorney.

Company owners Seth and Robert Obetz said there was no such arrangement to have company funds pay for Lyons’ credit-card debt, according to the district attorney’s office.

The payments covered trips and airfare, online purchases, gym memberships, home projects, spa services, dining costs, college costs for a relative and other costs.

Police also allege Connelly had an inflated salary, as authorized by Lyons. And her gas and home heating were paid by the company even after her retirement, the district attorney’s office said.

Additionally, Connelly continued to have access to the company accounting system after retirement, using a company laptop computer at home to gain access, according to the district attorney’s office.

Police were first contacted in May 2018 and met with a co-owner and the current controller. The alleged misuse of funds, police learned, was recorded in company paperwork as “cost of goods” by Lyons and Connelly.

Lyons is out on $1 million bail, which was posted by two bondsmen on Tuesday, according to court documents.

Lyons’ attorney, Robert Beyer of Lancaster law firm Goldberg & Beyer, declined to comment.

Connelly is out on $50,000 bail, which was posted by a bondsman Monday, court records show.

Connelly’s attorney, Terrence McGowan of Harrisburg law firm Killian & Gephart LLP, said Connelly denies the allegations.

A preliminary hearing for both Connelly and Lyons is slated for Sept. 6 with Judge Edward Tobin presiding

Editor’s note: This story has been updated from its earlier version to include comment from Connelly’s attorney and to show that Lyons is free on bail.

Shelby White
Shelby White covers banking and finance, law and Lancaster County for the Central Penn Business Journal. For tips, email her at swhite@cpbj.com.

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