A business owner who rigged meters to get paid for natural gas he didn’t actually supply has been sentenced to four months in jail.
After the jail time, Marshall Holbrook with serve six months on home detention under the sentence handed down by U.S. District Judge Claria Horn Boom on Tuesday.
Boom also ordered Holbrook to pay $239,642 in restitution to Delta Natural Gas.
Holbrook, of Knox County, and his father, Mark E. Holbrook, were partners in a company that leased natural gas wells in southeastern Kentucky. Mark Holbrook was the majority owner.
They supplied gas to customers that included Delta and the city of Somerset, which provides gas service to homes, businesses and industrial plants.
After the price of natural gas dropped, cutting into the Holbrooks’ revenue, they took part in a scheme to manipulate meters in a way that showed their company was sending more gas to Delta and Somerset than it really was, according to Mark Holbrook’s plea agreement.
That resulted in the victims paying for gas they didn’t receive.
The prosecutor, Assistant U.S. Attorney William P. Moynahan, said in a sentencing memorandum that Marshall Holbrook also benefited from a separate scheme in which gas flowed into his company through an unsanctioned tap on a Delta line, which Holbrook then got credit for putting back into the Delta system.
Marshall and Mark Holbrook each pleaded guilty to a conspiracy charge. Boom sentenced Marshall Holbrook Tuesday at a hearing in federal court in London.
Mark Holbrook has not been sentenced.
Marshall Holbrook’s attorney, Samuel B. Castle Jr., said in a sentencing memorandum that his involvement in the events “were the result of the orders and direction” of his father.
The potential sentence for Holbrook under advisory guidelines was seven to 12 months in prison, though he also was eligible for probation.
Castle asked Boom to place Holbrook on probation, saying he is a good husband and father and would be better able to work and pay restitution if he wasn’t locked up.
Holbrook apologized during the hearing, saying he was overwhelmed with regret. He said he had prayed to be a better person.
“I let evil win and I’m never going to let evil win again,” he told the judge.
However, Moynahan asked Boom to sentence Holbrook to 10 months behind bars, pointing out he and his father continued the fraud for years.
“His primary motive appears to have been greed,” Moynahan said in a sentencing memo.
Boom said she was persuaded to impose a lower sentence on Holbrook because of his humility, his professed intent to run his business honestly, his family support and because spending less time behind bars would increase his chance to pay restitution.
But Boom said said not requiring some jail time for Holbrook would have depreciated the seriousness of the crime.
The fraud resulted in higher prices for gas customers, including poor people, she said.
“Ultimately the cost of your crime was visited on some of the most vulnerable in the community,” Boom told Holbrook.
The charge covered in Marshall Holbrook’s guilty plea dealt with manipulating Delta meters in Whitley and Laurel counties. His sentence makes him liable for restitution only to Delta.
Bruce Neely, director of the Somerset Gas Department, said in an interview that his understanding is any restitution for the city would be covered in Mark Holbrook’s case.
The impact of the Holbrooks’ fraud was about $3.6 million, not counting the cost of work to pin down the problem, Neely said in a victim impact statement to the court.
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