Julie Beasley denies knowledge of fraud scheme

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By Ann McGlynn | Thursday, January 24, 2008 |

Former Quad-City Times employee Earl Beasley. (QUAD-CITY TIMES FILE PHOTO) Buy this Photo

UPDATED: Julie Beasley opened post office boxes for R&E Enterprises and Protech Co. in late 1998.

She became a co-signer on the R&E Enterprises bank account and opened an account for Protech as well.

As the years went on, she alone met with the tax preparer. She ordered a listing for Protech in the business section of the phone book. She endorsed the checks that arrived from the Quad-City Times and its parent company, Lee Enterprises. She wrote checks out of those accounts. Sometimes she gave cash to her husband; otherwise, she paid personal expenses.

She was listed as the sole proprietor of the companies on tax forms. She lists the companies as her home-based self-employment on loan applications.

But Beasley, 51, of Taylor Ridge, Ill., says she did not know her husband was scamming his employer, the Quad-City Times, out of hundreds of thousands of dollars with the shell companies. She did not know he was creating false invoices for janitorial and mechanical items, submitting those invoices to the Times and then approving them himself for payment, she said Thursday during testimony given in her trial for fraud, money laundering and conspiracy in U.S. District Court in Davenport.

She still does not know what some of the items on the invoices are, she said, and never delivered any products to the newspaper.

She believed her husband was buying items with the cash she gave him, she said, and thought he was turning around and selling them to the newspaper, where he worked as building maintenance supervisor.

“I simply did what he wanted me to do,” she said.

In fact, Beasley said she did not know of the fraud until both were arrested in February 2007, and that Earl Beasley, her now ex-husband, did not admit to her to committing the crime until shortly before he pleaded guilty in December. Prosecutors say the bogus companies billed the Times for $893,000 of products that were never supplied.

“I was very angry. I was very upset. I was very disappointed,” Julie Beasley said.

Prosecutor Cliff Cronk questioned whether she believed it was important to tell the truth before asking her about the tax documents that list her as the sole proprietor for the two shell companies.

“I don’t consider myself a sole proprietor,” she said.

He asked her about bank loan documents that list her as self-employed by the companies and used the term “we” when referring to one of the businesses.

“I meant this term loosely,” Julie Beasley said.

Cronk questioned why the Beasleys’ address did not appear on any of the documents associated with the businesses, except for the joint tax return filed by them from 1998 through 2005. Instead, post office boxes in Rock Island and Milan were used as the addresses for the companies.

“Earl wanted them as a P.O. box,” Julie Beasley said. “He didn’t want business stuff coming to the house.”

Cronk ended his cross-examination of Julie Beasley by asking her why an address on Knoxville Road in Milan was listed as the address for Protech — for at least two years — on an advertisement for a business listing in the phone book. She admitted that she had taken out the ad, at Earl’s request, and signed off on the wording.

“I have no idea,” she said, several times.

Cronk responded that he had something to jog her memory, showing her a photo of the entrance to Paradise Manor Mobile Home Park. He informed her that her brother, Junior Glidewell, lived there. Beasley said she had never been to her brother’s house and had no idea where he lived.

Earlier in the afternoon, Earl Beasley took the stand in his ex-wife’s defense.

Beasley said R&E Enterprises began selling supplies to the Times in the late ’90s because his parents needed money. Earl Beasley said he signed off on the purchases. In 1998, Beasley said his parents needed more money, so he created Protech, which was supposed to provide mechanical equipment to the Times. He also signed off on all those purchases, he said.

Despite his parents’ financial woes, Beasley admitted his father gave him $10,000 to start buying goods for Protech to supply products. Beasley also testified his parents earlier had sold him a $60,000 piece of land for a dollar.

“My mother and father were great investors in my ranch,’’ Beasley said. “My dad was very proud of my and Julie’s accomplishments with the horses.”

Beasley claimed that his parents, as well as his wife, never knew about his schemes. As Earl Beasley’s parents aged, they became less involved in the companies. His father died in 2001, he said.

Early in the scheme, Earl Beasley said, former Times operations manager Pat Lee came to his office with questions about purchases from R&E Enterprises. She had an invoice in her hand.

Earl Beasley told her it was a family company. Lee told him she doubted the Times would be able to do business with the company but said she would check. She later told him he would have to bid all items purchased from R&E, but otherwise Lee Enterprises was OK with using the company, he said.

“That’s the last we ever talked about it,” Beasley said.

After that conversation, the price of ice melt received from R&E dropped from $18 a bag to $6.25, Cronk said. And 55-gallon drums of industrial cleaner dropped by $100 a barrel. Earl Beasley testified he started making the cleaner himself.

“I’m the only one who knew anything” about the scams, he testified.

Earl Beasley said he began the scheme because he thought he needed to be reimbursed for items he brought to the newspaper, including equipment he inherited from his father.

“It wasn’t like I was trying to steal everything from the Quad-City Times blatantly,” he said.

At first, he said, he inflated the number of items he actually provided. He then moved on to fabricate items purchased.

He made Julie Beasley open accounts and handle checks because he was too busy working for the paper, he said.

“I didn’t have time to do the banking,’’ he said. “‘All I ever did was work 24 hours a day, seven days a week, 365 days a year for the Quad-City Times.”

The amount of invoices submitted to the Times changed monthly depending on what was happening at the Times, he said.

“My main focus was ... the needs of my building and take care of my people,” he said.

Earl Beasley insisted the couple’s horse farm — the Flying B Ranch — was making money. He never saw the couple’s tax returns, he said. He and his former wife rarely talked about the businesses, he said.

Tax returns showed that the farm lost money every year, while R&E and Protech made money.

When Cronk confronted Beasley about stealing the Times’ “money straight out,” Beasley countered that the Times is a “company that dumps hazardous waste into the sewer and covers it up.”

“Sounds like you’re a little vindictive,” Cronk said.

Julie Bechtel, publisher, said later outside the trial that Beasley’s hazardous-waste accusation is unfounded and that “employees are well-trained in proper disposal of chemicals and that the company’s systems are inspected regularly. We’ve never received any indication from any agency that there’s been the slightest evidence of a problem.”

The fraud was first discovered when Bechtel, who had been working at the Times for a little more than a year, discovered bogus charges on a company credit card issued to Earl Beasley. Investigation revealed the shell companies, Protech and R&E Enterprises. Earl Beasley was fired in January 2007. Indictments followed against the Beasleys. He has pleaded guilty to 74 of 76 charges of fraud and money laundering. Two counts of conspiracy remain against him.

The government also is working to seize the couple’s property. The two divorced around the time he pleaded guilty, because “I felt that I betrayed them,” Earl Beasley said, meaning Julie Beasley and their 9-year-old daughter.

Earl Beasley told his wife initially that “everything was on the up and up, and these were speculations from the Quad-City Times publisher.”

Cronk asked Earl Beasley if he considered himself an honest person.

“Am I an honest person? Of course not,” Earl Beasley said. “If I was an honest person, I wouldn’t be sitting here today.”

Ann McGlynn can be contacted at (563) 383-2336 or amcglynn@qctimes.com.