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Former Worley & Obetz CEO sentenced to 14 years in prison for fraud, tax evasion

Jeffrey Lyons, 59, pleaded guilty to the charges in federal court last October. He was sentenced Wednesday by U.S. District Judge Jeffrey L. Schmehl.
Jeffrey Lyons

LANCASTER COUNTY, Pa. — The former CEO of a Lancaster County company accused of committing a 15-year fraud scheme will serve up to 14 years in federal prison, United States Attorney William M. McSwain announced Wednesday.

Jeffrey Lyons, 59, of Lancaster, pleaded guilty to bank fraud and tax evasion in October. He was sentenced Wednesday by U.S. District Judge Jeffrey L. Schmehl.

Lyons is the former CEO of Worley & Obetz, a Manheim-based energy firm that closed its doors in 2018 after 72 years of operation, costing all 275 employees their jobs. 

The closure came after news that Lyons created fake financial statements to dupe Fulton Bank into offering millions of dollars in loans over a period of more than a decade.

“The scope and duration of the fraud committed by Lyons is simply stunning,” said  McSwain. “He stole tens of millions of dollars from bank lenders, all while willfully ignoring his fiduciary duty to the company and the hundreds of people who made their livelihoods working there. This case is a tragedy for the many honest, hardworking people who placed their trust in Lyons.”

Lyons inflated the company’s revenue on its financial statements for Fulton Bank between 2003 and May 2018. As a result, the bank used the statements that it believed to be authentic to lend Worley & Obetz over $60 million. 

Lyons used the Fulton loans to pay Worley & Obetz expenses, which included his annual salary of over $500,000, McSwain said. 

He also used the borrowed money to make Worley & Obetz appear profitable when it was actually operating at a loss, to pay interest on the earlier loans he borrowed from Fulton, and to fund some of his personal expenses including real estate worth millions, according to McSwain.

The scheme was discovered when Lyons abruptly went missing on May 15, 2018. He was found in Minnesota on May 17. 

The company laid off 45 employees on May 21, and said in a statement it had been forced to adjust its operating expenses due to "potential fraudulent activity" involving Lyons.

More layoffs soon followed before the company closed its doors for good on June 4, 2018.

Two former Worley & Obetz controllers, Karen Connelly and Judith Avilez, were also charged for their alleged involvement in the crimes. 

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Lyons’ tax evasion charge is for him not reporting over $650,000 in income received from Worley & Obetz back in 2013.

In addition to prison time, Lyons must repay $54 million in restitution to Fulton Bank and $552,000 in restitution to the IRS for the back taxes he owes.

Connelly pleaded guilty in November and is scheduled to be sentenced on Sept. 24. She admitted assisting Lyons for the first 13 years of the scheme, until she retired.

Avilez has pleaded not guilty and is free on $50,000 bail. She is set to go to trial in September.

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